Question

Sales $50,400,000

Cost of goods sold $31,500,000

Variable expenses $6,300,000

Fixed expenses $7,150,000

Inventory $9,150,000

Accounts receivable $5,150,000

Other current assets $4,150,000

Fixed assets $7,150,000

a) What is the Net Profit Margin in PERCENT % (rounded to two decimal places)?

b) What is the Asset Turnover rounded to two decimal places?

c) What is the Return on Assets in PERCENT % (rounded to two decimal places)?

d) What is the Size of the Total Assets used by the firm?

Answer 1

A	B	C	D	E	F	G	H
2
3		a)
4
5		Net Profit Margin	=Net Profit / Total Sales
6
7		Net Profit can be calculated as follows:
8		Sales	$50,400,000
9		Cost of Goods sold	$31,500,000
10		Gross Profit	$18,900,000
11		Variable Expense	$6,300,000
12		Fixed Expenses	$7,150,000
13		Net Income	$5,450,000	=D10-D11-D12
14
15		Net Profit Margin	=Net Profit / Total Sales
16			=$5,450,000 / $50,400,000
17			10.81%
18
19		Hence Net Profit Margin	10.81%
20
21		b)
22
23		Asset Turnover	=Total Sales / Average Total Asset
24
25		Total asset can be calculated as follows:
26		Inventory	$9,150,000
27		Accounts Recievable	$5,150,000
28		Other Current Assets	$4,150,000
29		Fixed Assets	$7,150,000
30		Total Assets	$25,600,000	=SUM(D26:D29)
31
32		Asset Turnover	=Total Sales / Average Total Asset
33			=$50,400,000 / $25,600,000
34			1.97	=D8/D30
35
36		Hence Asset Turnover	1.97
37
38		c)
39
40		Return on assets	=Net Income / Total Assets
41			=$5,450,000 / $25,600,000
42			10.81%
43
44		Hence Return on assets	10.81%
45
46		d)
47		As calculated in part (b),
48		Total assets	$25,600,000
49

Formula sheet