Question

In its 2014 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $8,113 million, end-of-the-year total assets of $8,323 million, total sales of $8,268 million, and net income of $807 million.
a. Compute Campbell?s asset turnover.

b. Compute Campbell?s profit margin on the sale.

c. Compute Campbell?s return on an asset using (1) asset turnover and profit margin and (2) net income.

Return on assets
(1) Assets turnover and profit margin _____%
(2) Net income _____%

Answer 1

Answer:

a. The asset turnover is $1.0061

b. The profit margin on the sale is 9.7605%

c. The return on an asset is 9.82%

Explanation:

a. In order to calculate the company asset turnover we would have to make the following calculation:

asset turnover=Turnover/Average operating assets

According to the given data:

Turnover=$8,268 million

Average operating assets=beginning-of-the-year total assets+nd-of-the-year total assets

Average operating assets=$8,113 million+$8,323 million

Average operating assets=$8,218 million

Therefore, asset turnover=$8,268 million/$8,218 million

asset turnover=$1.0061

b. In order to calculate the company profit margin on the sale we would have to make the following calculation:

profit margin on the sale=Net income*100/sales

Net income=$807 million

Therefore, profit margin on the sale=$807 million*100/$8,268 million

profit margin on the sale=9.7605%

c. In order to calculate the company return on an asset we would have to make the following calculation:

return on an asset=Assets turnover*Profit margin

return on an asset=$1.0061*9.7605%

return on an asset=9.82%