Question

Rotablade's net income was $600,000 on sales of $24 million for the year. Average assets for the year were $8 million. For the year, what was the margin, turnover, and ROI?

1) margin was 4%, turnover was 2.0, and ROI was 8%.
2) margin was 2.5%, turnover was 2.0, and ROI was 5%.
3) margin was 2.5%, turnover was 3.0, and ROI was 7.5%.
4) margin was 4%, turnover was 3.0, and ROI was 12%.

Answer 1

Rotablade's margin is 2.5%, turnover is 3.0, and ROI is 7.5%. These figures are determined by dividing net income by sales for margin, sales by average assets for turnover, and multiplying margin by turnover for ROI.

Step-by-step explanation:

To answer the question regarding the firm Rotablade's financial performance metrics, we need to calculate the margin, turnover, and return on investment (ROI).

Firstly, the margin is calculated as Net Income divided by Sales. Therefore, the margin would be $600,000 / $24,000,000 which equals 0.025 or 2.5%.

Secondly, to get the turnover, we divide Sales by the Average Assets. Hence, the turnover equals $24,000,000 / $8,000,000, which is 3.0.

Lastly, the ROI is calculated by multiplying the margin by the turnover. We have a margin of 2.5% and a turnover of 3.0, hence the ROI is 0.025 * 3.0 which is 0.075 or 7.5%. So, our answer is the third option: margin was 2.5%, turnover was 3.0, and ROI was 7.5%.