A company had net income of $40,000, net sales of $300,000, and average total assets of $200,000. Its profit margin and total asset turnover were respectively:
A) 13.3%; 0.2.
B) 13.3%; 1.5.
C) 2.0%; 1.5.
D) 1.5%; 0.2.
E) 1.5%; 13.3.

Question

Quizplus · Accepted Answer

Profit margin = net income/net sales = 40,000/300,000 = 0.1333 or 13.3%
Total asset turnover = net sales/average total assets = 300,000/200,000 = 1.5. Therefore, the correct answer is B.

A Company Had Net Income of $40,000, Net Sales of $300,000