Return on net operating assets is a function of both profit margin and net operating asset turnover.

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Return on net operating assets is a function of both profit margin and net operating asset turnover.

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How
do you believe that knowledge of operating profit margin and operating asset turnover would contribute to analysis of the reported return on net operating assets for the following companies (that is, if the business reported high return on net operating assets, is it more likely that operating profit margin is especially high or that operating asset turnover is especially high or both)? Make your assessments relative to industry norms.
a. BMW
b. Ford
c. Sak’s Fifth Avenue
d.Target
e. Wal-Mart
f. McDonald’s
g.Amazon.com

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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Financial Statement Analysis

ISBN: 978-0078110962

11th edition

Authors: K. R. Subramanyam, John Wild

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