A firm has an ROA of 8%, sales of $100, and total assets of $71. What is its profit margin?
A) 1.3%
B) 4.3%
C) 5.7%
D) 10.7%
E) 16.7%

Question

Quizplus · Accepted Answer

The profit margin can be calculated using the formula: Profit Margin = (Net Income / Sales) * 100. Given the ROA (Return on Assets) is 8%, we can find the net income by multiplying the ROA by the total assets: Net Income = ROA * Total Assets = 8% * $71 = $5.68. Then, the profit margin is ($5.68 / $100) * 100 = 5.7%.

A Firm Has an ROA of 8%, Sales of $100