Quick Cement has a return on assets of 8%.If it has $1.5 million in total assets and a total asset turnover of 2, it follows that the firm must have a net profit margin of
A)4%.
B)6%.
C)8%.
D)12%.

Question

Quizplus · Accepted Answer

The return on assets (ROA) is calculated as Net Profit Margin multiplied by Total Asset Turnover. Given ROA is 8% and Total Asset Turnover is 2, the Net Profit Margin is 8% / 2 = 4%.

Quick Cement Has a Return on Assets of 8