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Requirement-1:
To Calculate:
The Return on Total Assets of Samsung for the two most recent years
Requirement-1:
Answer to Problem 3AA
The Return on Total Assets of Samsung for the two most recent years is as follows:
| Samsung | ||
| Current Year | 1 Year Prior | |
| Return on Total Assets | 15.0% | 9.0% |
Explanation of Solution
The Return on Total Assets of Samsung for the two most recent years is calculated as follows:
| Samsung | ||
| In Millions | Current Year | 1 Year Prior |
| Net Income (A) | 42,186,747 | 22,726,092 |
| Beginning Total Assets (B) | 262,174,324 | 242,179,521 |
| Ending Total Assets (C) | 301,752,090 | 262,174,324 |
| Average Total Assets (D) = (B+C)/2 = | 281,963,207 | 252,176,923 |
| Return on Total Assets =(A/D) = | 15.0% | 9.0% |
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-2:
If Return on Total Assets of Samsung for current year is better or worse than Apple and Google
Requirement-2:
Answer to Problem 3AA
The Return on Total Assets of Samsung for current year is better than Apple and Google both.
Explanation of Solution
The Return on Total Assets of Samsung, Apple and Google for the Current year is calculated as follows:
| Samsung | Apple | |||
| In Millions | Current Year | Current Year | Current Year | |
| Net Income (A) | 42,186,747 | 48,351 | 12,662 | |
| Beginning Total Assets (B) | 262,174,324 | 321,686 | 167,497 | |
| Ending Total Assets (C) | 301,752,090 | 375,319 | 197,295 | |
| Average Total Assets (D) = (B+C)/2 = | 281,963,207 | 348,503 | 182,396 | |
| Return on Total Assets =(A/D) = | 15.0% | 13.9% | 6.9% | |
The Return on Total Assetsof Samsung is highest for the current year; hence return on Total Assets of Samsung for current year is better than Apple and Google both.
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-3:
To Calculate:
The Profit Margin of Samsung for the current year
Requirement-3:
Answer to Problem 3AA
The Profit Margin of Samsung for the current year is 17.6%
Explanation of Solution
The Profit Margin of Samsung for the current year is calculated as follows:
| Samsung | |
| In Million | Current Year |
| Net Income (A) | 42,186,747 |
| Net Sales (B) | 239,575,376 |
| Profit Margin (C) = A/B = | 17.6% |
Concept Introduction:
Return on total Assets:
The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:
Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:
Profit Margin Ratio:
Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:
Asset Turnover Ratio:
Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:
Requirement-4:
To Calculate:
The Total Asset Turnover of Samsung for the current year
Requirement-4:
Answer to Problem 3AA
The Total Asset Turnover of Samsung for the current year is 0.85
Explanation of Solution
The Total Asset Turnover of Samsung for the current year is calculated as follows:
| Samsung | |
| In Million | Current Year |
| Net Income (A) | 42,186,747 |
| Net Sales (B) | 239,575,376 |
| Profit Margin (C) = A/B = | 17.6% |
| Beginning Total Assets (D) | 262,174,324 |
| Ending Total Assets (E) | 301,752,090 |
| Average Total Assets (F) = (D+E)/2 = | 281,963,207 |
| Asset Turnover Ratio (G) = B/F= | 0.85 |
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