Question

Juventus Corp has total assets of $5,037,081, total debt of $3,398,222, and net sales of $7,132,299. Their net profit margin for the year is 13 percent. What is Juventus's return on assets (ROA)? Round intermediate calculations to nearest two decimals if needed. Do not type the \% symbol.

Answer 1

Juventus Corp's Return on Assets (ROA) is calculated using the net profit margin and net sales to determine the net income, which is then divided by total assets. The calculation results in an ROA of 18.40%, showing the efficiency of the company's asset utilization in generating profits.

Step-by-step explanation:

The question is asking us to calculate Juventus Corp's Return on Assets (ROA), which is a financial ratio that indicates how profitable a company is relative to its total assets. This ratio gives investors and stakeholders an idea of how efficiently the company is using its assets to generate earnings. To find the ROA, we need to know the company's net income, which is not provided directly but can be calculated using the net profit margin and the net sales figures given.

The net profit margin is the percentage of revenue that becomes profit after all expenses are deducted. It's given as 13%, so we can calculate Juventus's net income as follows:

Net Income = Net Profit Margin x Net Sales
Net Income = 0.13 x $7,132,299
Net Income = $927,198.87

Now we can calculate the ROA:

ROA = (Net Income \/ Total Assets) x 100
ROA = ($927,198.87 \/ $5,037,081) x 100
ROA = 18.40%

Thus, Juventus Corp's ROA is 18.40%, indicating how well it has used its assets to generate profit.