Question

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 18,600,000 Net operating income $ 5,900,000 Average operating assets $ 35,900,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.) 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

The correct answer for option (1) is 31.72%, for option (2) is 0.52 times and for option (3) is 16.43%.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Sales = $18,600,000

Net operating income = $5,900,000

Average operating assets = $35,900,000

(1). We can calculate the margin for Alyeska service company by using following formula:

Margin = Net operating income ÷ Sales

= $5,900,000 ÷ $18,600,000

= 0.3172 or 31.72%

(2). We can calculate the turnover for Alyeska service company by using following formula:

Turnover = Sales ÷ Average operating assets

= $18,600,000 ÷ $35,900,000

= 0.52 Times

(3). We can calculate the ROI for Alyeska service company by using following formula:

ROI = Net operating income ÷ Average operating assets

= $5,900,000 ÷ $35,900,000

= 0.1643 or 16.43%