The Buffalo Manufacturing Company has total assets of $10 million, an asset turnover of 2.0 times, and

Question:

The Buffalo Manufacturing Company has total assets of $10 million, an of 2.0 times, and a net profit margin of 15%.
a. What is Buffalo’s return on assets?
b. Find Buffalo’s ROE, given that 40% of the assets are financed with stockholders’ equity.
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.