Question

Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation. a. Butters Corporation has a profit margin of 6 percent and its return on assets (investment) is 14 percent. What is its assets turnover? (Round your answer to 2 decimal places.)

Answer 1

2.33

Step-by-step explanation:

Given that,

Profit margin = 6%

Return on assets (Investment) = 14%

Using the Du Point method,

Profit margin × Total assets turnover = Return on assets (Investment)

6% × Total assets turnover = 14%

Therefore,

Total assets turnover = 14% ÷ 6%

= 2.33

Hence, its assets turnover is 2.33