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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?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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?
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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