Business Finance Homework help?
I have had a tremendous amount of difficulties with one problem in my college business finance class. If you are able to answer please show your work so i can see how you get to the answer because this is something I am going to need to know how to do all semester. Alpha Industries had an asset turnover of 1.4 times per year. If the return on total assets (investment) was 8.4 percent, what was Alpha’s profit margin? Thanks for all the help
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- Start with the definitions of the ratios. Asset Turnover = Revenue / Assets Return On Assets = Net Income / Assets Profit Margin = Net Income / Revenue A bit of algebra shows that Profit Margin = ROA / Asset Turnover = 8.4 / 1.4 = 6%
