a. Alpha Industries had an asset turnover of 1.4 times per year. If the return on total

Question:

a. 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?

b. The following year, on the same level of assets, Alpha's asset turnover declined to 1.2 times and its profit margin was 7 percent.

How did the return on total assets change from that of the previous year?

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.