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n200080 [17]
3 years ago
9

Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is t

o sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.
Sub Station Planet Sub
Net sales $108,249 $62,071
Net Income 25,922 3.492
Total assets, beginning 75,183 38,599
Total assets, ending 116,371 44,533
Required:
1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.
Business
1 answer:
Effectus [21]3 years ago
6 0

Answer:

The computations are shown below:

Explanation:

Return On Assets = Net income ÷ Average Total Assets × 100

where,

Average of Assets =  (Beginning Total Assets + Ending Total Assets) ÷ 2

= ($75,183 + $116,371) ÷ 2

= $191,554 ÷ 2

= $95,777

So, the return on investment is  

=$25,922 ÷ $95,777 × 100

= 27.06%

Profit Margin = Net income ÷ Sales × 100

= $25,922 ÷ $108,249 × 100

= 23.95%

Assets Turnover = Sales ÷ Average of  Total Assets

= $108,249 ÷$95,777

= 1.13

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