5.Information is provided below for two companies for 2007:
KemperGong
Total assets$100,000$200,000
Total debt40,000120,000
Sales120,000250,000
Fixed costs60,000120,500
Variable costs48,00080,000
Net income12,00049,500
Required:
a.Compute profit margin, asset turnover, and return on assets.
b.Compute profit margin, asset turnover, and return on assets for both firms if sales increased by 10%.
c.Compute profit margin, asset turnover, and return on assets for both firms if sales decreased by 10%.
d.Discuss the impact on the ROA.
6.During 2007, Merrill Corporation had $30 million in sales. Return on assets was 18% and asset turnover was 1.5.
Required:
Compute (a) profit margin, (b) total assets, and (c) net income.