1. Earl’s Fishing Tackle, Inc. earned a 3.0% net profit margin last year. The firm earned the return on $2,000,000 in sales using $500,000 in total assets, $450,000 of which were fixed assets. The firm therefore earned a return on investment of
A. Cannot be determined from the information provided.
B. 8.0%
C. 9.75%
D. 12.0%
2. The Gabriel Packaging Company, Inc. currently has Sales of $5,000,000 per year. Cost of Goods sold amounts to 80% of Net Sales. The firm, which is in the 30% tax bracket has $500,000 in net fixed assets and $100,000 in accumulated depreciation. The firm’s Fixed Asset Turnover ratio is
A. 12.5 Times per year
B. 8.0 Times per year
C. Cannot be determined from the information provided.
D. 10.0 times per year