Question

Last year Electric Autos had sales of $175 million and assets at the start of the year of $300 million. If its return on start-of-year assets was 15%, 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:

Operating profit margin = 25.71%

Explanation:

Amount of return on asset = Rate of return x Asset value

Amount of return on asset = 15% x $300,000,000

Amount of return on asset = $45,000,000

Operating profit margin = Amount of return on asset / Sales

Operating profit margin = $45,000,000 / $175,000,000

Operating profit margin = 0.257143

Operating profit margin = 25.71%