Question

if the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on asset?

Answer 1

The return on assets (ROA) can be calculated by multiplying the profit margin, asset turnover, and financial leverage. In this case, the ROA is 0.0826 or 8.26%.

Step-by-step explanation:

To calculate the return on assets (ROA), you need to multiply the profit margin, asset turnover, and financial leverage. ROA is calculated by multiplying the profit margin by asset turnover and then multiplying the result by financial leverage:

ROA = Profit margin x Asset turnover x Financial leverage

Substituting the given values:

ROA = 0.1142 x 0.5619 x 1.2937
ROA = 0.0826

The return on assets is 0.0826, or 8.26%.

Answer 2

To find the Return on Assets, multiply the profit margin (0.1142) by the asset turnover (0.5619), resulting in an ROA of 6.42%.

Step-by-step explanation:

The question is asking for the Return on Assets (ROA), which is a financial ratio that indicates how profitable a company is relative to its total assets. To calculate the ROA, you multiply the profit margin by the asset turnover. Given that the profit margin is 0.1142 and asset turnover is 0.5619, you would calculate the ROA as follows:

ROA = Profit Margin × Asset Turnover

ROA = 0.1142 × 0.5619

ROA = 0.0642 or 6.42%

This calculation demonstrates that for every dollar of assets, the company generates 6.42 cents in profits.