Question

The 2017 Annual Report of Tootsie Roll Industries contains the following information.

(in millions) December 31, 2017 December 31, 2016
Total assets $930.9 $920.1
Total liabilities 197.1 208.6
Net sales 515.7 517.4
Net income 80.7 67.2
Compute the following ratios for Tootsie Roll for 2017.
(a) Asset turnover (Round answer to 3 decimal places, e.g. 0.851 times.)
(b) Return on assets (Round answer to 2 decimal places, e.g. 4.87%.)
(c) Profit margin on sales (Round answer to 2 decimal places, e.g. 4.87%.)

Answer 1

1.108 times

8.66%

16%

Step-by-step explanation:

A. 2017 Asset turnover

Net sales / Average total assets

= 515.7/[(930.9 + 0)/2]

= 515.7/465.45

= 1.108 times

B. Return on assets

Net income/Total assets

= 80.7/930.9

= 0.0866 × 100

= 8.669%

C. Profit margin on sales

= Net income/Net sales

= 80.7/515.7

= 0.16 × 100

= 16%