Question

Atlanta Company, had an ROA of 6.5 percent, a profit margin of 11.50 percent, and sales $20 million. Calculate Atlanta's total assets. Show your calculation

Answer 1

The right solution is "35.39".

Step-by-step explanation:

Given:

Profit margin,

= 11.50%

or,

= 0.115

ROA,

= 6.5%

or,

= 0.065

Sales,

= $20 million

As we know,

⇒
`Profit \ margin = (Net \ income)/(Sales)`

or,

⇒
`Net \ income = Sales* Profit \ margin`

`=20* 0.115`

`=2.3`

hence,

The total asset will be:

⇒
`ROA = (Net \ income)/(Total \ assets)`

or,

⇒
`Total \ assets = (Net \ income)/(ROA)`

`=(2.3)/(0.065)`

`=35.39`