What Is the ROA of a Firm with $150,000 in Average

question 11

Multiple Choice

What is the ROA of a firm with $150,000 in average receivables, which represents 60 days sales, average assets of $750,000, and a profit margin of 9%?

• A)5.60%
• B)6.50%
• C)8.85%
• D)10.95%

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Definitions:

Desired Ending Inventory

The amount of inventory a business plans to have on hand at the end of a period to ensure operations run smoothly and meet customer demand.

Direct Materials

Raw materials that can be directly attributed to the production of goods.

Sales Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Sales Commissions

Payments made to sales staff based on the value of the sales they have made, typically a percentage of the sales amount.