Polly Esther Dress Shops, Inc., can open a new store that will do an annual sale
ID: 2630321 • Letter: P
Question
Polly Esther Dress Shops, Inc., can open a new store that will do an annual sales volume of $1,285,200. It will turn over its assets 2.8 times per year. The profit margin on sales will be 6 percent.
What would net income and return on assets (investment) be for the year? (Round your return on assets to 1 decimal place. Omit the "$" and "%" signs in your response.)
Polly Esther Dress Shops, Inc., can open a new store that will do an annual sales volume of $1,285,200. It will turn over its assets 2.8 times per year. The profit margin on sales will be 6 percent.
Explanation / Answer
net income = 1285200 * 0.06 = 77112
asset turnover = sales/total assests
total assets = 1285200/2.8 = 459000
return on assets = 77112/459000 = 16.8%