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Bond [772]
3 years ago
12

Peyton’s Palace has net income of $15 million on sales revenue of $130 million. Total assets were $96 million at the beginning o

f the year and $104 million at the end of the year. Calculate Peyton’s return on assets, profit margin, and asset turnover ratios.
Calculate Peyton's return on assets, profit margin, and asset turnover ratios.
Business
1 answer:
Lelechka [254]3 years ago
5 0

Answer:

See below

Explanation:

1. Returns on assets

= Annual net income ÷ Average total assets

Average total assets = beginning asset + ending assets ÷ 2

= ($80 million + $88 million) ÷ 2

= $84 miiliom

Return on assets = $13.4 million ÷ $84 million

Return on assets = $159.52

2. Profit margin

= Net income ÷ Net sales

= $13.4 million ÷ $114 million

= 11.75%

3. Assets turnover ratio

= Net sales ÷ Average total assets.

Recall Average total assets = $84 million

Average turnover ratio

= $114 million ÷ $84 million

= 1.36 times

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