Question

Bobcat Elevator reported financial statements indicate an increase in its return on assets, even though its net profit margin declined. This is due to

Answer 1

When there is an increase in return on assets and yet there is a decline in profit margin, this is due to an increase in asset turnover.

How can return on assets increase if profit margin decreases?

The profit margin is calculated by dividing the net income by the sales amount while return on assets is found by dividing the net income by total assets.

If the asset turnover increased, it means that there are less assets which means that the return on assets will be higher even though the profit margin will be lower.

Find out more on asset turnover at brainly.com/question/14527137.