Question

Last year Electric Autos had sales of $105 million and assets at the start of the year of $160 million. If its return on start-of-year assets was 10%, what was its operating profit margin?

Answer 1

Answer: 15.24%

Explanation:

To calculate the operating profit margin, you can use the following formula:

Operating Profit Margin = (Operating Profit / Sales) * 100

First, you need to calculate the operating profit, which is the return on start-of-year assets. Given that the return on start-of-year assets was 10%, you can calculate it as:

Operating Profit = (Return on Start-of-Year Assets / 100) * Start-of-Year Assets

Operating Profit = (10 / 100) * $160 million

Operating Profit = $16 million

Now, you have the operating profit, and you already have the sales figure, which is $105 million. Plug these values into the formula to calculate the operating profit margin:

Operating Profit Margin = ($16 million / $105 million) * 100

Operating Profit Margin ≈ 15.24%

So, Electric Autos' operating profit margin was approximately 15.24% last year.