Question

Last year Electric Autos had sales of $165 million and assets at the start of the year of $280 million. If its return on start-of-year assets was 10%, what was its operating profit margin? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)

Answer 1

Answer: 16.9697%

Explanation:

Sales = $165 million

Assets in beginning of year = $280 million

Assets return on start of the year = 10%

$Return\ on\ Net\ Assets =\frac{Operating\ Profit}{Net\ Assets}\times 100$

$\frac{Return\ on\ Net\ Assets\times Net\ Assets}{100} =Operating\ Profit$

$\frac{10\times 280}{100} =Operating\ Profit$

Operating Profit = 28

$Operating\ Profit\ Margin = \frac{Operating\ Profit}{Sales\ revenue}$

$Operating\ Profit\ Margin = \frac{28}{165}\times 100$

                                                  =  16.9697%