Question

Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 18,600,000 Net operating income $ 5,700,000 Average operating assets $ 35,200,000 Required: 1. Compute the margin for Alyeska Services Company. (Round your answer to 2 decimal places.) 2. Compute the turnover for Alyeska Services Company. (Round your answer to 2 decimal places.) 3. Compute the return on investment (ROI) for Alyeska Services Company. (Round your intermediate calculations and final answer to 2 decimal places.)

Answer 1

1. Margin:

Margin for Alyeska Services Company = Operating Income

Revenue (Sales)

= $5,700,000   

$18,600,000

= 0.30

Margin = 0.30

2. Turnover:

Asset Turnover Ratio = Net Sales   

Average Assets

= $18,600,000   

$35,200,000

= 0.53

Asset Turnover Ratio = 0.53

3. Return on Investment (ROI):

Return on Investment = Net Operating Income X 100

Total Investments

= $5,700,000    X 100

$35,200,000

= 16.19 %

Return on Investment = 16.19 %

Final Answer:

1. Margin = 0.30

2. Turnover = 0.53

3. ROI = 16.19%