Question

Database Systems is considering expansion into a new product line. Assets to support expansion will cost $970,000. It is estimated that Database can generate $2,060,000 in annual sales, with an 6 percent profit margin. What would net income and return on assets (investment) be for the year

Answer 1

Answer and Explanation:

The computation is shown below:

net income is

= sales × profit margin

= $2,060,000 × 0.06

= $123,600

And,

return on assets is

= net income ÷ total assests

= $123,600 ÷ $970,000

= 12.74%

In this way these two things should be calculated

and, the same should be considered