Brad\'s BBQ reported sales of $645,000 and net income of $39,500. Brad\'s also r

Question

Brad's BBQ reported sales of $645,000 and net income of $39,500. Brad's also reported ending total assets of $490,000 and beginning total assets of $383,000. Required Calculate the return on assets, the profit margin, and the asset turnover ratio for Brad's BBQ. Return on Assets Choose NumeratorChoose Denominator- Return on Assets Return on assets Profit Margin Choose Numerator Choose Denominator Profit Margin Profit margin Asset Turnover Choose Numerator ÷ Choose Denominator = Asset Turnover Asset turnover times

Explanation / Answer

Return on assets = Net income / Average total assets = $39,500 / [($490,000 + $383,000) / 2] = $39,500 / $436,500 = 9.05%

Profit Margin = Net income / Sales = $39,500 / $645,000 = 6.12%

Asset Turnover = Sales / Average total assets = $645,000 / [($490,000 + $383,000) / 2] = $645,000 / $436,500 = 1.48 times

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