Question

The R. M. Smithers Corporation earned an operating profit margin of 10 percent based on sales of $10 million and total assets of $5 million last year.
a. What was Smithers’ total asset turnover ratio?
b. During the coming year, the company’s president has set a goal of attaining a total asset turnover of 3.5. How much must firm sales increase, other things being the same, for the goal to be achieved? (State your answer in both dollars and the corresponding percent increase in sales.)
c. What was Smithers’ operating return on assets last year? Assuming the firm’s operating profit margin remains the same, what will the operating return on assets be next year if the total asset turnover goal is achieved?



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  • CreatedOctober 31, 2014
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