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


Sales (A) 384,00,000



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



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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