document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1184492>Question 1184492</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Net sales are 20 times as great as net income. If the sales are turn over 3 times during the year, what is the rate of return on assets? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #849843 by </B><A HREF=/tutors/aboutme.mpl?userid=CPhill><B>CPhill(1959)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=CPhill><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=CPhill><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=849843\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Here's how to calculate the rate of return on assets (ROA) given the information provided:\r<BR>\n" );
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document.write( "1. **Calculate the profit margin:**\r<BR>\n" );
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document.write( "Profit margin is calculated as Net Income / Net Sales. We're told that Net Sales are 20 times greater than Net Income.  This means:\r<BR>\n" );
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document.write( "Net Sales = 20 * Net Income\r<BR>\n" );
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document.write( "Therefore:\r<BR>\n" );
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document.write( "Profit Margin = Net Income / (20 * Net Income) = 1/20 = 0.05 or 5%\r<BR>\n" );
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document.write( "2. **Calculate the total asset turnover:**\r<BR>\n" );
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document.write( "We are given that sales turnover 3 times during the year. This is also called asset turnover.\r<BR>\n" );
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document.write( "Total Asset Turnover = Net Sales / Average Total Assets\r<BR>\n" );
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document.write( "We know that Total Asset Turnover is 3.\r<BR>\n" );
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document.write( "3. **Calculate the Return on Assets (ROA):**\r<BR>\n" );
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document.write( "ROA is calculated as Profit Margin * Total Asset Turnover.\r<BR>\n" );
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document.write( "ROA = Profit Margin * Total Asset Turnover<BR>\n" );
document.write( "ROA = 0.05 * 3<BR>\n" );
document.write( "ROA = 0.15 or 15%\r<BR>\n" );
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document.write( "Therefore, the rate of return on assets is 15%.<BR>\n" );
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