Question

A company had net income of $49,000, net sales of $390,000, and average total assets of $290,000. Its profit margin and total asset turnover were respectively:___________A) 12.56%; 1.34.B) 12.56%; 0.17.C) 1.34%; 12.56.D) 1.34%; 0.17.E) 1.96%; 1.34.

Answer 1

Profit margin = 12.56% (Approx)

Total asset turnover = 1.34 (Approx)

Step-by-step explanation:

Given:

Net income = $49,000

Net sales = $390,000

Average total assets = $290,000

Find:

Profit margin

Total asset turnover

Computation:

Profit margin = [Income / sales]100

Profit margin = [49,000 / 390,000]100

Profit margin = 12.56% (Approx)

Total asset turnover = Net Sales / Average total assets

Total asset turnover = $390,000 / $290,000

Total asset turnover = 1.34 (Approx)