Pete's Boats has at the end of the year has a Net Income of £100,000, Total Assets of £50,000 and Sales of £75,000. What is the ﬁrms Proﬁt margin and Return on Assets (ROA)?
A)1.3333 and 0.5.
B)0.75 and 2.
C)1.3333 and 2.
D)0.6666 and 2.
E)0.6666 and 0.5.

Question

Quizplus · Accepted Answer

To find the firm's profit margin, we divide the net income by sales:

Profit margin = net income / sales = 100,000 / 75,000 = 1.3333

To find the return on assets (ROA), we divide the net income by total assets:

ROA = net income / total assets = 100,000 / 50,000 = 2

Therefore, the best choice is C, which has the correct values for both the profit margin and ROA.

Pete's Boats Has at the End of the Year Has