A Company Reported Net Income for Year 1 of $98,000

question 197

Essay

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $835,000 in Year 1 and $918,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1 and Year 2.Did the company's return on total assets improve? What component(s)might explain this change?

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Definitions:

Owners' Equity

The residual interest in the assets of a business after deducting liabilities, essentially the ownership interest in the business.

Store Equipment

The fixtures and tools used in a retail store to display and manage products, excluding inventory.

Owners' Claims

Owners' claims refer to the interests or rights of ownership that shareholders or proprietors have in a company, including profits and assets.

Business Assets

Resources owned by a business that have economic value and can contribute to future profits, such as equipment, inventory, and patents.