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mina [271]
3 years ago
8

GoodTimes, Inc. has asset turnover of 0.5 times, a net profit margin of 10% and average total assets of $100, what is its net in

come (assuming no unusual items)?
Business
1 answer:
adelina 88 [10]3 years ago
6 0

Answer:

$5

Explanation:

Given that,

Asset turnover ratio = 0.5 times

Net profit margin = 10 percent

Average total assets = $100

Asset turnover ratio = sales ÷ Total asset

0.5 = sales ÷ $100

sales = $50

Profit margin = Net income ÷ sales

0.10 = Net income ÷ $50

Net income = $5

Therefore, the net income of GoodTimes, Inc. is $5.

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Answer:

a Interest paid to partners based on the amount of invested capital.

Explanation:

A partnership is formed between two parties that agree to go into a venture for mutual gain. The parties share ownership of the business entity and as such are entitled to profit from their equity holdings.

Interest paid based on invested capital is considered a distribution of profit by the business and not an expense. This is similar to sharing profit to shareholders in a company.

Legitimate expenses include: cost of sales, staff cost, administrative costs, advertising costs, and professional expenses like hiring an accountant.

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