Forcum Company Reports the Following Information (In Millions) During a Recent

question 215

Essay

Forcum Company reports the following information (in millions) during a recent year: net sales, $12,408.5; net earnings, $344.9; total assets, ending, $4,312.6; and total assets, beginning, $4,254.3.
Instructions
(a) Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin ratios.
(b) Prove mathematically how the profit margin and asset turnover ratios work together to explain return on assets, by showing the appropriate calculations.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping from left to right.

Straight Line Demand

An economic model where the demand for a product changes at a constant rate relative to price changes, depicted as a straight line on a graph.

Important Factors

Critical elements or variables that significantly influence an outcome or determine the success of a particular process or activity in economics.

Price Affect Demand

The relationship between the price of a good or service and the willingness of consumers to buy it, where typically, a higher price leads to lower demand and a lower price leads to higher demand.