Answered Essay: Given the following information: Use Figure 2.3. Categories Values

Given the following information: Use Figure 2.3.

Categories Values
Sales $ 38,400,000
Cost of goods sold $ 24,000,000
Variable expenses $ 4,800,000
Fixed expenses $ 6,400,000
Inventory $ 8,400,000
Accounts receivable $ 4,400,000
Other current assets $ 3,400,000
Fixed assets $ 6,400,000

a. What is the net profit margin for this firm? (Round your answer to 2 decimal places.)

b. What is the asset turnover? (Round your answer to 2 decimal places.)

c. What is the return on assets? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. What is the size of the total assets used by the firm?

Expert Answer

Revenue

Sales (A) 384,00,000

_______

Expenses

COGS                                      240,00,000

Variable Expenss                     48,00,000

Fixed Expenses 64,00,000

Total Expenses            (B)                                          352,00,000

_______

Net Profit         (A-B) 32,00,000

1.Net Profit Margin                                                         (Net Profit/Sales Revenue)*100

(32,00,000/352,00,000)*100 = 8.33%

*Net Profit = Total Sales – (Cost of Goods Sold+ Variable Expenses + Fixed Expenses)

2. Asset Turnover = Total Sales Revenue/Total Sales

 

Total Asset       =         Inventory +Accounts receivable+Other current assets+Fixed assets

=             84,00,000+44,00,000+34,00,000+64,00,000

=             226,00,000

Asset Turnover =            (226,00,000/384,00,000)*100

 

58.85%

3. Return on Asset = Net Income/Total Asset

 

32,00,000/226,00,000 = 14.15%

* Net Profit(Income) and Total Assets values have been taken from calculations done in part 1 and part 2 respectively.

4 .Total Asset   =         Inventory +Accounts receivable+Other current assets+Fixed assets

=             84,00,000+44,00,000+34,00,000+64,00,000

=             226,00,000

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