Question
Question:
The income statement and balance sheet data of two companies aresummarized below.
CompanyX CompanyY
Sales Rs.700,000 (d)
Netincome Rs.29,000 Rs. 31,000
Totalassets Rs.300,000 (e)
Total assetturnover (a) (f)
Net Profitmargin (b) 0.5%
Return on totalassets (c) 1%
Requirement:
Fill in the missing information and show your completeworking.
Explanation / Answer
Company X: Net profit margin= (Net income /Sales ) =(29,000 /700,000) = 0.041 Total asset turnover =Sales /assets =700,000/300,000 =2.33 Return on total assets=Net income/Totalassets =(29,000 /300,000) = 0.096 Company Y Net profit margin= (Net income /Sales ) 0.005 = 31,000/sales Sosales = 62,00,000 Return on total assets=Net income/Totalassets 0.001 =(31,000 /Total assets ) Totalassets =31,00,000 Return on total assets=Net income/Totalassets 0.001 =(31,000 /Total assets ) Totalassets =31,00,000 Total asset turnover =Sales /assets =62,00,000/31,00,000 = 2 Total asset turnover =Sales /assets =62,00,000/31,00,000 = 2