Answered: (a) Calculate the asset turnover ratio…

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(a) Calculate the asset turnover ratio for 2023. (Round answer to 2 decimal places, e.g. 52.75.)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 80E: Asset Efficiency Ratios Refer to financial statements in Exercise 12-76 and the information below....

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Question

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The 2023 annual report for Pronghorn Industries Inc. contained the following information:
Dec. 31, 2022 Dec. 31, 2023

Total assets 561,000 605,000
Total liabilities 65,400 88,900
Net revenue 410,000 530,000
Net income 54,000 32,000

(a) Calculate the asset turnover ratio for 2023. (Round answer to 2 decimal places, e.g. 52.75.)

b) Calculate the profit margin on sales for 2023.

c) Calculate the rate of return on assets using total assets for 2023.

d) Calculate the rate of return on assets using profit margin for 2023

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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Step 1: Definition of assets turnover ratio:

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Step 2: Requirement a- Calculation of asset turnover ratio for 2023:

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Step 3: Requirement b- Calculation of profit margin on sales for 2023:

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Step 4: Requirement c- Calculation of rate of return on assets for 2023:

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