A Company Had Net Income of $86,000 in Year 1

question 37

Essay

A company had net income of $86,000 in Year 1 and $118,000 in Year 2. Its net sales were
$640,000 in Year 1 and $611,000 in Year 2. Its average total assets in Year 1 were $1,670,000 and
$1,712,000 in Year 2. Calculate the profit margin, total asset turnover and return on total assets for both years. Comment on the results.

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Definitions:

Goods X

An unspecified product or commodity that is the subject of economic analysis or transaction.

Goods Y

A reference to a particular class or type of goods, often used in economic models.

Diminishing Marginal Rate

The Decline in the additional output produced when a new unit of input is added, with all other inputs held constant.

Substitution

The economic concept where consumers replace more expensive items with less costly alternatives, or firms replace inputs with more economical options.