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7 December, 17:58

Crane Company reports the following information (in millions) during a recent year: net sales, $10,700.0; net earnings, $365.0; total assets, ending, $4,155.0; and total assets, beginning, $4,340.0.

(a) Calculate the

(1) return on assets,

(2) asset turnover, and

(3) profit margin.

(Round answers to 1 decimal place, e. g. 6.2% and 6.2.) 1. Return on assets enter the return on assets in percentages rounded to 1 decimal places % 2. Asset turnover enter the asset turnover rounded to 1 decimal places times 3. Profit margin enter the profit margin in percentages rounded to 1 decimal places %

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  1. 7 December, 20:51
    0
    (a)

    (1) return on assets = 8.6%

    (2) asset turnover = 2.5 times

    (3) profit margin = 3.45%

    Explanation:

    Given

    Net sales = $10,700.0

    Net earnings = $365.0

    Total assets, ending = $4,155.0

    total assets, beginning = $4,340.0

    (a)

    (1) Return on assets = net income/average total assets

    = 365 / ((4155 + 4340) / 2)

    = 365 / (8495/2)

    = 730/8495

    = 0.0859

    ≈ 0.086 ≈ 8.6% (rounded to 1 decimal place)

    (2) Asset turnover = net revenue/average total assets

    = 10700 / ((4155 + 4340) / 2)

    = 10700 / (8495/2)

    = 21400/8495

    = 2.5 times (rounded to 1 decimal place)

    (3) Profit margin = net earning/net sales

    = 365/10700

    = 0.034 ≈ 3.45% (rounded to 1 decimal place)
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