Question

The Taylor Company has an ROA of 8.4 percent, a profit margin of 9.5 percent, and an ROE of 15.5 percent. What is the company’s total asset turnover? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

The total asset turnover for the Taylor Company is calculated by dividing the Return on Assets (ROA) by the profit margin. Upon calculation, the Taylor Company's total asset turnover is 0.88.

Step-by-step explanation:

The student has asked for help in calculating the total asset turnover for the Taylor Company given their Return on Assets (ROA), profit margin, and Return on Equity (ROE). To find the total asset turnover, we can use the relationship that ROA is equal to the profit margin multiplied by the total asset turnover.

ROA = Profit Margin × Total Asset Turnover

We rearrange the formula to solve for Total Asset Turnover:

Total Asset Turnover = ROA / Profit Margin

Substituting the given values:

Total Asset Turnover = 8.4% (or 0.084) / 9.5% (or 0.095)

When we calculate this, we get:

Total Asset Turnover = 0.8842 or 0.88 after rounding to two decimal places as required.

Therefore, the Taylor Company's total asset turnover is 0.88.