Question

Blossom Company reports the following information (in millions) during a recent year: net sales, $10,810.0; net earnings, $324.3; total assets, ending, $5,380.0; and total assets, beginning, $5,430.0. (a) Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin. (Round answers to 1 decimal place, e.g. 6.2% and 6.2.)

Answer 1

1. Return on Assets = 6%
2. Asset Turnover = 2.0 times
3. Profit Margin = 3%

Step-by-step explanation:

1. Return on assets;

= Net Income / Average Total Assets

Average Total Assets = (5,380 + 5,430) / 2

= $5,405

Return on Assets = 324.3/5,405

= 6%

2. Asset Turnover

= Net Sales / Average Total Assets

= 10,810/5,405

= 2.0 times

3. Profit Margin

= Net Income/ Net Sales

= 324.3/10,810

= 3%