Answer:
ROA=4.13
Asset turnover ratio = 0.70 times
Explanation:
1.Computation for ROA
Using this formula
ROA=Net income/Total assets
First step is to find Day's sales in receivables before calculating for the sales amount
Day's sales in receivables = Numbers of days in a year/Total receivables days sales
Let plug in the formula
Day's sales in receivables = 365 / 20
Day's sales in receivables = 18.25times
Now let find the Sales amount using this formula
Sales= Day's sales in receivables× Total receivables
Let plug in the formula
Sales = 18.25 times × $2,800
Sales=$51,100
Second step is to find the Net income
Using this formula
Net income =Percentage of Operating margin× Sales amount
Let plug in the formula
Net income=5.9%×$51,100
Net income =$3,014.90
Now let find the ROA using this formula
ROA=Net income/Total assets
Let plug in the formula
ROA=$3,014.90/$73,000
ROA=0.0413×100
ROA=4.13%
Therefore ROA will be 4.13%
2. Computation for asset turnover ratio
First step is to calculate for the Receivables turnover
Using this formula
Day's sales in receivables = Numbers of days in a year/Total receivables days sales
Let plug in the formula
Day's sales in receivables = 365 / 20
Day's sales in receivables = 18.25times
Second step is to find the Sales amount using this formula
Sales= Day's sales in receivables× Total receivables
Sales = 18.25 times × $2,800
Sales=$51,100
Now let calculate for the Asset turnover ratio using this formula
Asset turnover ratio = Sales / Total assets
Let plug in the formula
Asset turnover ratio= $51,100 / $73,000
Asset turnover ratio= 0.70 times
Therefore asset turnover ratio will be 0.70 times
