The Purple Martin has annual sales of $687,400, total debt of $210,000, total equity of $365,000, and a profit margin of 5.9 percent. What is the return on assets

7.1%

Explanation:

Purple martin has an annual sales of $687,400

The total debt is $210,000

Total equity is $365,000

Profit margin is 5.9%

= 5.9/100

= 0.059

The first step is to calculate the net income

Net income = sales*profit margin

= $687,400*0.059

= $40,556.6

The next step is to calculate the total assets

Total assets = Total debt+Total equity

= $210,000+$365,000

= $575,000

Therefore, the return on assets can be calculated as follows

ROA = Net income/Total assets

= 40,556.6/575,000

= 0.0705*100

= 7.1%

Hence the return on assets is 7.1%