Database Systems is considering expansion into a new product line. Assets to sup

Question

Database Systems is considering expansion into a new product line. Assets to support expansion will cost $890,000. It is estimated that Database can generate $1,860,000 in annual sales, with an 13 percent profit margin.

What would net income and return on assets (investment) be for the year? (Input your return on assets answer as a percent rounded to 2 decimal places.)

Database Systems is considering expansion into a new product line. Assets to support expansion will cost $890,000. It is estimated that Database can generate $1,860,000 in annual sales, with an 13 percent profit margin.

Explanation / Answer

1) Profit Margin = Net income/ sales ; 13% = NI/ 1,860,000 ; Net Income = $241,800
2) Return on Assets = Net Income/ Assets; ROA = $241,800/$890,000 = 27.17%

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.