The R. M. Smithes Corporation earned an operating profit margin of 11.5% based on sales of $9.8 million and total assets of $5.2 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 3.1. How much must firm sales increase, other things being the same for the goal to be achieved? 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?
The R. M. Smithes Corporation earned an operating profit margin of 11.5% based on sales of $9.8 million and total assets of $5.2 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 3.1. How much must firm sales increase, other things being the same for the goal to be achieved? 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The R. M. Smithes Corporation earned an
operating profit margin of 11.5% based on sales
of $9.8 million and total assets of $5.2 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 3.1. How much must firm sales
increase, other things being the same for the
goal to be achieved?
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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