Net income for the year would be $85,800 and the return on assets (investment) is 26.81%.
Net income represents the total profit a company earns after deducting all expenses and taxes.
Net Income = Annual Sales * Profit Margin
Net Income = $1,430,000 * 0.06
Net Income = $85,800
Return on assets (ROA) measures a company's efficiency in generating profit relative to its total assets which indicates its ability to use assets effectively for profitability.
Return on Assets (ROA) = Net Income / Total Assets
ROA = $85,800 / $320,000
ROA = 0.268125
ROA = 26.81%.
Full question:
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $320,000. It is estimated that Database Systems can generate $1,430,000 in annual sales, with an 6 percent profit margin. What would net income and return on assets (investment) be for the year?