Ask Question
6 March, 02:31

The Purple Martin has annual sales of $687,400, total debt of $210,000, total equity of $365,000, and a profit margin of 5.9 percent. What is the return on assets

+4
Answers (1)
  1. 6 March, 04:13
    0
    7.1%

    Explanation:

    Purple martin has an annual sales of $687,400

    The total debt is $210,000

    Total equity is $365,000

    Profit margin is 5.9%

    = 5.9/100

    = 0.059

    The first step is to calculate the net income

    Net income = sales*profit margin

    = $687,400*0.059

    = $40,556.6

    The next step is to calculate the total assets

    Total assets = Total debt+Total equity

    = $210,000+$365,000

    = $575,000

    Therefore, the return on assets can be calculated as follows

    ROA = Net income/Total assets

    = 40,556.6/575,000

    = 0.0705*100

    = 7.1%

    Hence the return on assets is 7.1%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The Purple Martin has annual sales of $687,400, total debt of $210,000, total equity of $365,000, and a profit margin of 5.9 percent. What ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers