Final answer:
To find Gamma's profit margin on sales, we can use the formula: Profit Margin = Return on Assets x Asset Turnover. Given that Gamma's return on assets is 10% and its asset turnover is 4:1, the profit margin is 2.5%.
Step-by-step explanation:
To find Gamma's profit margin on sales, we can use the formula:
Profit Margin = Return on Assets × Asset Turnover
Given that Gamma's return on assets is 10% and its asset turnover is 4:1, we can calculate the profit margin as:
Profit Margin = 10% × (1 / 4) = 2.5%
Therefore, the correct answer is Option D. 2.5%.