 Business
30 August, 14:24

# The 2011 Annual Report of Tootsie Roll Industries contains the following information.(in millions)December 31, 2011December 31, 2010Total assets \$857.9 \$858.0Total liabilities 191.9 190.6Net sales 528.4 517.1Net income 43.9 53.0Compute the following ratios for Tootsie Roll for 2011.(a) Asset turnover ratio (Round answer to 4 decimal places, e. g. 0.8512 times.)The 2011 Annual Report of Tootsie Roll Industries times.(b) Return on assets (Round answer to 2 decimal places, e. g. 4.87%.)The 2011 Annual Report of Tootsie Roll Industries %(c) Profit margin on sales (Round answer to 2 decimal places, e. g. 4.87%.)The 2011 Annual Report of Tootsie Roll Industries

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1. 30 August, 15:55
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Answer: (a) asset turnover in 2011

= 62%.

In 2010 = 61%

(b) Return on assets in 2011

= 6%

In 2010 = 7%

(c) Profit margin on sales in 2011

= 9%

In 2010 = 11%

Explanation: (a) asset turnover in 2011 is calculated using the formula,

Asset turnover = net sale/average total asset. Where net sales in 2011 is 528.4 and average total asset is 857.9, therefore

528.4/857.9 = 62%

Repeating thesame procedure for 2010=517.1/858.0 = 61%

(b) Return on assets is calculated using this formula.

Return=net income/average total asset. Where in 2011, net income is 43.9, and total asset is 857.9

Therefore in 2011 return on asset

= 43.9/857.9 = 6%

Repeating thesame procedure for 2010 values we get

53.0/858.0 = 7%

(c) Profit margin on sales in 2011 is calculated by using net income/net sales, where net information 2011 is 43.9 and net sales is 528.4, therefore

Profit margin = 43.9/528.4 = 9%

Repeating same procedure for 2010 values we have that

In 2010 profit margin on sales = 53.0/517.10 = 11%