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Boise Corporation reported ROA of 4%, ROE of 6%, and Sales/Total assets ratio of 2.0 last year. What is the company's profit margin last year?

a) 5%
b) 4%
c) 3%
d) 2%

User Stech
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1 Answer

6 votes

Answer:

d) 2%

Step-by-step explanation:

ROA = profit margin x assets turnover ratio

ROA = 4%

assets turnover ratio = sales / assets = 2

profit margin = ROA / assets turnover ratio = 4% / 2 = 2%

Profit margin refers to how much money does a company make from its revenue, i.e. how many cents does a company earn from every dollar of revenue. In this case, the company's net profit is 2¢/$

User Ricardo Canelas
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