Sales = $23.8 million
Total equity = $31.3 million
Total debt = $16.7 million
Profit margin = 8% = 0.08
Return of assets = ?
First we calculate the total assets:
Total assets = Total debt + Total equity
= $16.7 million
+ $31.3 million = $48 million
Now find net income by using this formula:
Profit margin = Net income / Sales
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Net income = Profit Margin × Sales
= 0.08 x 23,800,000 = $1,904,000
Now calculate Return of assets:
Return on assets = Net income / Total assets
=$1,904,000 / 48,000,000
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Return on assets = 3.967%
