Question

Compute the following ratios for both years (2019 and 2018), using total net income and assets. Use ending balance sheet figures.
net profit margin
return on total assets (use year-end total assets) 2019 2018 Net sales $65,000 $61,000 Equity income (dividends: $65,$62)     320     365 Total $65,320 $61,365 Total expenses, including taxes 63,800 59,700 Net income $ 1,520 $ 1,665 Total assets $32,200 $30,600 Investment (using equity method) 3,800 2,800

Answer 1

Solution

Net profit margin = 2.34% for 2019 and 2.73% for 2018.

Alternate answer could be 2% for 2019 and 3% for 2018.

Working

	2019	2018
Net income	$        1,520.00	$       1,665.00
Sales revenue	$      65,000.00	$     61,000.00
Net Profit Margin	2.34%	2.73%

Requirement 2

Return on total assets = 4.72% for 2019 and 5.44% for 2018

Alternate answer could be 5% for 2019 and 5% for 2018

Working

	2019	2018
Net income	$                   1,520.00	$        1,665.00
Total assets	$                 32,200.00	$      30,600.00
Return on total assets	4.72%	5.44%