Music City had net income of $43,000,net sales of $380,500 and average total assets of $220,000.Its profit margin and total asset turnover were respectively:
A) 11.3%; 1.73.
B) 11.3%; 11.3.
C) 1.73%; 19.5.
D) 11.3%; 19.5.
E) 19.5%; 11.3.

Question

Quizplus · Accepted Answer

Profit margin = Net income / Net sales = 43,000 / 380,500 = 0.113 or 11.3%

Total asset turnover = Net sales / Average total assets = 380,500 / 220,000 = 1.73

Therefore, the correct answer is A, with a profit margin of 11.3% and total asset turnover of 1.73.

Music City Had Net Income of $43,000,net Sales of $380,500