Question

acquired: Firm A has a margin of 11%, sales of $610,000, and ROI of 17%. Calculate the firm's average total assets. Firm B has net income of $72,000, turnover of 1.40, and average total assets of $920,000. Calculate the firm's sales, margin, and ROI. Firm C has net income of $136,000, turnover of 2.01, and ROI of 23.40%. Calculate the firm's margin, sales, and average total assets.

Answer 1

1. Firm's average total assets = Net Income/ROI = $610,000*0.11 / 0.17 = $394,705.88

2. Sales = Assets turnover ratio * Average total assets = 1.40*920,000 = $1,288,000

Margin = Net Income / Sales = $72,000/$1,288,000 = 0.06

ROI = Net Income / Average Total Assets = $72,000/920,000 = 0.078

3. Average Total Assets = Net Income / ROI = $136,000/23.40% = 136,000/0.2340 = $581,196.58

Sales = Assets turnover ratio * Average total assets= 2.01*$581,196.58 = $1,168,205.12

Margin = Net Income / Sales = $136,000/$1,168,205.12 = 0.1164