Firm M has a margin of 10%, turnover of 1.6, sales of $850,000, and average stoc

Question

Firm M has a margin of 10%, turnover of 1.6, sales of $850,000, and average stockholders' equity of $340,000. Required: Calculate Firm M’s average total assets, net income, return on investment (ROI), and return on equity (ROE).

the choices to choose from for numerator and denominator: ( sales, turnover, margin, net income, average total assets, average stockholder equity)

AVERAGE TOTAL ASSETS

NET INCOME

RETURN ON INVESTMENT

RETURN ON EQUITY

Explanation / Answer

AVERAGE TOTAL ASSETS=SALES*1.6 1360000 (850000*1.6) NET INCOME =SALES *MARGIN 85000 (850000*10%) ROI=NET INCOME/AVEARGE TOTAL ASSET 6.25% (85000/1360000) ROE=NET INCOME/average stockholders' equity 25.00% (85000/340000)

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