Determine the dollar amount of revenues for a venture with the following financial information: net profit = $60,000; assets turnover = 1.5 times; and return on assets 30%.
A)$300,000
B)$500,000
C)$800,000
D)$1,200,000

Question

Quizplus · Accepted Answer

The return on assets (ROA) is given as 30%, which is calculated as Net Profit / Total Assets. Therefore, if Net Profit is $60,000, then Total Assets = $60,000 / 0.30 = $200,000. Given the asset turnover ratio is 1.5 times, which is calculated as Revenue / Total Assets, then Revenue = Asset Turnover * Total Assets = 1.5 * $200,000 = $300,000.

Determine the Dollar Amount of Revenues for a Venture with the Following