Answer:
ROA for 20X1= 10%
Profit margin for 20X1= 5%
Assets turnover= 2
ROA for the coming year= 11.25%
Explanation:
Weber corporation return on assets for 20X1 can be calculated as follows
ROA= Net income/Average total assets × 100
= 2,450,000/24,500,000 × 100
= 0.1 × 100
= 10%
The profit margin can be calculated as follows
= Net income/sales × 100
= 2,450,000/49,000,000 × 100
= 0.05 × 100
= 5%
The assets turnover ratio can be calculated as follows
= Sales/Average Total assets
= 49,000,000/24,500,000
= 2
The company ROA if when the turnover rate for next year is2.25 and the profit margin remain unchanged can be calculated as follows
= profit margin × assets turnover ratio
= 5% × 2.25
= 11.25%
