Question

Omni Technology Holding Company has the following three affiliates:

	Software			Personal Computers			Foreign Operations
Sales	$	40,200,000		$	60,080,000		$	100,680,000
Net income (after taxes)		2,086,000			2,880,000			8,510,000
Assets		5,820,000			25,790,000			60,630,000
Stockholders' equity		4,090,000			10,170,000			50,950,000

Compute the return on sales.

software %

Personal computer %

Foreign Operations :

compute the return on assets.

Software %

Personal Computers %

Foreign Operations %

Compute the total asset turnover.

Software times

Personal Computers times

foreign Operations times

Compute the return on stockholders equity

software %

Personal Computers %

Foreign Operations %

compute the debt ratio

software %

personal computers %

foreign operations %

Answer 1

Software:

Return on Sales = Net Income / Sales
Return on Sales = $2,086,000 / $40,200,000
Return on Sales = 5.19%

Return on Assets = Net Income / Assets
Return on Assets = $2,086,000 / $5,820,000
Return on Assets = 35.84%

Total Asset Turnover = Sales / Assets
Total Asset Turnover = $40,200,000 / $5,820,000
Total Asset Turnover = 6.91 times

Return on Stockholders’ Equity = Net Income / Stockholders’ Equity
Return on Stockholders’ Equity = $2,086,000 / $4,090,000
Return on Stockholders’ Equity = 51.00%

Debt Ratio = (Assets - Stockholders' Equity) / Assets
Debt Ratio = ($5,820,000 - $4,090,000) / $5,820,000
Debt Ratio = 29.73%

Personal Computers:

Return on Sales = Net Income / Sales
Return on Sales = $2,880,000 / $60,080,000
Return on Sales = 4.79%

Return on Assets = Net Income / Assets
Return on Assets = $2,880,000 / $25,790,000
Return on Assets = 11.17%

Total Asset Turnover = Sales / Assets
Total Asset Turnover = $60,080,000 / $25,790,000
Total Asset Turnover = 2.33 times

Return on Stockholders’ Equity = Net Income / Stockholders’ Equity
Return on Stockholders’ Equity = $2,880,000 / $10,170,000
Return on Stockholders’ Equity = 28.32%

Debt Ratio = (Assets - Stockholders' Equity) / Assets
Debt Ratio = ($25,790,000 - $10,170,000) / $25,790,000
Debt Ratio = 60.57%

Foreign Operations:

Return on Sales = Net Income / Sales
Return on Sales = $8,510,000 / $100,680,000
Return on Sales = 8.45%

Return on Assets = Net Income / Assets
Return on Assets = $8,510,000 / $60,630,000
Return on Assets = 14.04%

Total Asset Turnover = Sales / Assets
Total Asset Turnover = $100,680,000 / $60,630,000
Total Asset Turnover = 1.66 times

Return on Stockholders’ Equity = Net Income / Stockholders’ Equity
Return on Stockholders’ Equity = $8,510,000 / $50,950,000
Return on Stockholders’ Equity = 16.70%

Debt Ratio = (Assets - Stockholders' Equity) / Assets
Debt Ratio = ($60,630,000 - $50,950,000) / $60,630,000
Debt Ratio = 15.97%