(Learning Objective 7: Calculate return on assets) Hometown Supply Companyreported the following information in its comparative financial statements for the fiscal yearended January 31, 2018:January 31,2018January 31,2017Net sales....................................Net earnings..............................Average total assets...................$84,000$ 4,200$70,000$82,600$ 4,050$69,450Requirements1. Compute the net profit margin ratio for the years ended January 31, 2018, and 2017. Did itimprove or worsen in 2018?2. Compute asset turnover for the years ended January 31, 2018, and 2017. Did it improve orworsen in 2018?3. Compute return on assets for the years ended January 31, 2018, and 2017. Did it improveor worsen in 2018? Which component—net profit margin ratio or asset turnover—wasmostly responsible for the change in the company’s return on assets?
(Learning Objective 7: Calculate return on assets) Hometown Supply Company
reported the following information in its comparative financial statements for the fiscal year
ended January 31, 2018:
January 31,
2018
January 31,
2017
Net sales....................................
Net earnings..............................
Average total assets...................
$84,000
$ 4,200
$70,000
$82,600
$ 4,050
$69,450
Requirements
1. Compute the net profit margin ratio for the years ended January 31, 2018, and 2017. Did it
improve or worsen in 2018?
2. Compute asset turnover for the years ended January 31, 2018, and 2017. Did it improve or
worsen in 2018?
3. Compute return on assets for the years ended January 31, 2018, and 2017. Did it improve
or worsen in 2018? Which component—net profit margin ratio or asset turnover—was
mostly responsible for the change in the company’s return on assets?
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