toilet romance publisher has total receivables of 2,920 which represents 20 day sales total assets are...

toilet romance publisher has total receivables of 2,920 which represents 20 day sales total assets are 73,000 the firms operating profit margin at 6% find the farms ROA in asset turnover ratio?

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Expert Solution

Day's sales in receivables = 365 days / receivables turnover

20 = 365 days / Receivables turnover

Receivables turnover = 365 / 20

Receivables turnover = 18.25 times

Receivables turnover = Sales / Accounts receivables

18.25 = Sales / $2,920

Sales = $53,290

Asset turnover ratio = Sales / Total assets

Asset turnover ratio = $53,290 / $73,000

Asset turnover ratio = 0.73 times

Net income = 0.06 * $53,290 = $3,197.40

ROA = Net income / Total assets

ROA = $3,197.40 / $73,000

ROA = 0.0438 or 4.38%

jeff jeffy answered 2 years ago

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