A ﬁrm has an ROA of 8%, sales of $100, and total assets of $71. What is its proﬁt margin?
A) 1.3%
B) 4.3%
C) 5.7%
D) 10.7%
E) 16.7%

Question

Quizplus · Accepted Answer

The formula for ROA (Return on Assets) is Net Income / Total Assets. Given ROA is 8% and Total Assets are $71, Net Income = 0.08 * $71 = $5.68. The profit margin is Net Income / Sales, so $5.68 / $100 = 5.68%, which rounds to 5.7%.

A ﬁRm Has an ROA of 8%, Sales of $100