Question

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 18,600,000 Net operating income $ 6,100,000 Average operating assets $ 36,800,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.) 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

Answer:

1. 32.80%

2. 50.54 times

3. 16.57%

Explanation:

1. Computation of margin for Alyeska Services Company is below:-

Margin = Net operating income ÷ Sales

= $6,100,000 ÷ $18,600,000

= 32.80%

2. Computation of turnover for Alyeska Services Company

Turnover = Sales ÷ Average Operating Assets

= $18,600,000 ÷ $36,800,000

= 50.54 times

3.  Computation of return on investment for Alyeska Services Company

Return on investment = Margin × Turnover

= 32.80% × 50.54

= 16.57%