Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.

Sub Station Planet Sub

Net sales $108,249 $62,071

Net Income 25,922 3.492

Total assets, beginning 75,183 38,599

Total assets, ending 116,371 44,533

Required:

1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.

Question

Saul

Business

30 October, 07:03

Sub Station and Planet Sub reported the following selected financial data ($ in thousands). Sub Station's business strategy is to sell the best tasting sandwich with the highest quality ingredients. Planet Sub's business strategy is to sell the lowest cost sub on the planet.

Sub Station Planet Sub

Net sales $108,249 $62,071

Net Income 25,922 3.492

Total assets, beginning 75,183 38,599

Total assets, ending 116,371 44,533

Required:

1. Calculate Sub Station's return on assets, profit margin, and asset turnover ratio.

+1

Answers (1)

Know the Answer?

Helen Hancock · Answer 1

The computations are shown below:

Explanation:

Return On Assets = Net income : Average Total Assets * 100

where,

Average of Assets = (Beginning Total Assets + Ending Total Assets) : 2

= ($75,183 + $116,371) : 2

= $191,554 : 2

= $95,777

So, the return on investment is

=$25,922 : $95,777 * 100

= 27.06%

Profit Margin = Net income : Sales * 100

= $25,922 : $108,249 * 100

= 23.95%

Assets Turnover = Sales : Average of Total Assets

= $108,249 : $95,777

= 1.13