Question

A firm's net income is $630,000 on sales of $63 million. Average assets for the period were $14 million. For the year, what was the margin, turnover, and ROI?

1) margin was 5%, turnover was 1.2, and ROI was 6%
2) margin was 6%, turnover was 1.5, and ROI was 6%
3) margin was 4%, turnover was 1.2, and ROI was 4.8%
4) margin was 1%, turnover was 4.5, and ROI was 4.5%

Answer 1

Answer: To find the margin, turnover, and ROI, we can use the following formulas:

Margin = Net Income / Sales

Turnover = Sales / Average Assets

ROI (Return on Investment) = Net Income / Average Assets

Given the information provided:

Net Income = $630,000

Sales = $63 million = $63,000,000

Average Assets = $14 million = $14,000,000

Let's calculate each measure:

Margin = $630,000 / $63,000,000 = 0.01 (or 1%)

Turnover = $63,000,000 / $14,000,000 = 4.5

ROI = $630,000 / $14,000,000 = 0.045 (or 4.5%)

Comparing these calculations to the answer choices given, we find that the correct answer is:

4) margin was 1%, turnover was 4.5, and ROI was 4.5%

Please let me know if there's anything else I can help you with.

Step-by-step explanation:

Answer 2

Using the given financial data, the correct calculations result in a margin of 1%, a turnover of 4.5, and an ROI of 4.5%, thus making option 4) the correct choice.

Step-by-step explanation:

The question pertains to calculating a firm's margin, turnover, and return on investment (ROI). Let's break down each component using the given data.

• Margin: This is the net income divided by sales. For the given firm, the margin would be = ($630,000 / $63,000,000) * 100 = 1%.
• Turnover: Turnover is sales divided by average assets. For this firm, turnover would be = $63,000,000 / $14,000,000 = 4.5.
• ROI: Return on investment is calculated by multiplying margin and turnover. For this firm, ROI would be = 1% * 4.5 = 4.5%.

Hence, option 4) is correct: margin was 1%, turnover was 4.5, and ROI was 4.5%.