Question

Firm J has net income of $77,605, sales of $935,000, and average total assets of $467,500. Required: Calculate Firm J’s margin, turnover, and return on investment (ROI).

Answer 1

Firm J's margin= 8.3%

Firm J's turnover= 2

Firm J's ROI= 16.6%

Step-by-step explanation:

Form J has a net income of $77,605

The sales is $935,000

The average total assets is $467,500

Firm J's margin can be calculated as follows

Margin= Net income/sales

= $77,605/$935,000

= 0.083×100

= 8.3%

Firm J's turnover can be calculated as follows

Turnover= Sales/Average Total assets

= $935,000/$467,500

= 2

Firm J's return on investment can be calculated as follows

ROI= Net income/Average Total assets

= $77,605/$467,500

= 0.166×100

= 16.6%

Hence Firm J's margin, turnover and return on investment is 8.3%, 2 and 16.6% respectively.