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 $ 18,300,000 Net operating income $ 6,300,000 Average operating assets $ 36,400,000 Required: 1. Compute the margin. (Round your answer to 2 decimal places.) 2. Compute the turnover. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI).

Answer 1

Answer:

1. 34.43%

2. 0.50

3. 17.31%

Explanation:

Alyeska services company has a sale of $18,300,000

The net operating income is $6,300,000

The average operating assets is $36,400,000

(1) The margin can be calculated as follows

Margin= net operating income/sales ×100

= $6,300,000/18,300,000×100

= 0.34426×100

= 34.43%

(2) The assets turnover ratio can be calculated as follows

= Sales/Average operating assets

= $18,300,000/$36,400,000

= 0.50

(3) The Return on investment ROI can be calculated as follows

= Net operating income/Average Operating assets × 100

= $6,300,000/$36,400,000 × 100

= 0.17307×100

= 17.31%

Hence the margin, assets turnover ratio and ROI are 34.43%, 0.50 and 17.31% respectively