Neon Light Company has $1,000,000 in assets and $600,000 of debt. It reports net income of $100,000.

Question:

a. What is the return on the assets?

b. What is the return on the stockholders' equity?

c. If the firm has an asset turnover ratio of 3 times, what is the profit margin (return on sales)?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.

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Foundations of Financial Management

ISBN: 978-0077454432

14th edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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Question Posted: Jul 13, 2016 03:37 AM

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Neon Light Company has $1,000,000 in assets and $600,000 of debt. It reports net income of $100,000.

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Foundations of Financial Management

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