The following financial information was taken from a firm’s accounting records on December 31, 2017. Use...

The following financial information was taken from a firm’s accounting records on December 31, 2017. Use this information to determine the items below. Net Sales $ 800,000 Net Income Before Income Tax 45,000 Income Tax Expense 6,750 Net Income After Income Tax 38,250 Total Assets 400,000 Find the following 1. Rate of returns on net sales. 2. Rate of return on total assets. 3. Asset turnover.

Solutions

Expert Solution

1. Rate of returns on net sales.

Rate of returns on net sales = [ Net Income after Tax / Net Sales ] x 100

= [ $38,250 / $800,000 ] x 100

= 4.78%

2. Rate of return on total assets

Rate of return on total assets = [ Net Income after Tax / Total Asset ] x 100

= [ $38,250 / $400,000 ] x 100

= 9.56%

3. Asset turnover

Asset turnover = Net Sales / Total Assets

= $800,000 / $400,000

= 2 Times

ekkarill92 answered 1 year ago

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