- Your answer is partially correct. Larkspur International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company's current offerings, but offer a complementary fit to its existing product line. Fred Ridtdick, senior production department manager, is very excited about the high- tech new equipment that will have to be acquired to produce the new products. Barbara Dyson, the company's CFO, has provided the following projections based on results with and without the new products. Sales revenue Net income Without New Products With New Products $12,074,625 $16,549,800 $482,985 $827,490 Average total assets $5,366,500 $13,791,500 (a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line. (Round return on assets and profit margin to O decimal places, e.g. 15% and asset turnover to 2 decimal places, e.g. 15.25.) Return on assets Profit margin Without New Products 0.87 % 4 % With New Products 6 % 5 % Asset turnover 0.22 times 1.20 times
- Your answer is partially correct. Larkspur International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company's current offerings, but offer a complementary fit to its existing product line. Fred Ridtdick, senior production department manager, is very excited about the high- tech new equipment that will have to be acquired to produce the new products. Barbara Dyson, the company's CFO, has provided the following projections based on results with and without the new products. Sales revenue Net income Without New Products With New Products $12,074,625 $16,549,800 $482,985 $827,490 Average total assets $5,366,500 $13,791,500 (a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line. (Round return on assets and profit margin to O decimal places, e.g. 15% and asset turnover to 2 decimal places, e.g. 15.25.) Return on assets Profit margin Without New Products 0.87 % 4 % With New Products 6 % 5 % Asset turnover 0.22 times 1.20 times
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:-
Your answer is partially correct.
Larkspur International is considering a significant expansion to its product line. The sales force is excited about the opportunities that
the new products will bring. The new products are a significant step up in quality above the company's current offerings, but offer a
complementary fit to its existing product line. Fred Ridtdick, senior production department manager, is very excited about the high-
tech new equipment that will have to be acquired to produce the new products. Barbara Dyson, the company's CFO, has provided the
following projections based on results with and without the new products.
Sales revenue
Net income
Without New
Products
With New Products
$12,074,625
$16,549,800
$482,985
$827,490
Average total assets
$5,366,500
$13,791,500
(a) Compute the company's return on assets, profit margin, and asset turnover, both with and without the new product line. (Round
return on assets and profit margin to O decimal places, e.g. 15% and asset turnover to 2 decimal places, e.g. 15.25.)
Return on assets
Profit margin
Without New Products
0.87
%
4
%
With New Products
6
%
5
%
Asset turnover
0.22
times
1.20
times
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