Question

Highgate Computer Company produces $1.8 million in profits from $27 million in sales. It has total assets of $15.0 million. a. Calculate Highgate's total asset turnover and its net profit margin. b. Find the company's ROA, ROE, and book value per share, given that it has a total net worth of $6.0 million and 500,000 shares of common stock outstanding. a. Highgate's total asset turnover is . (Round to two decimal places.) Highgate's net profit margin is %. (Round to two decimal places.) b. The company's ROA is %. (Round to two decimal places.) The company's ROE is %. (Round to two decimal places.) The company's book value per share is $| 7. (Round to the nearest cent.)

Answer 1

a) Total assets turnover is = (Sales/Total assets) Total assets turnover is = (27/15) Total assets turnover is = 1.80 Times Net Profit margin % = (Profit/Sales)*100 Net Profit margin % = (1.80/27)*100 Net Profit margin%= 6.67% b) Return on Assets = (Profit/Total assets)*100 Return on Assets = (1.80/15)*100 Return on Assets = 12% Return on Equity = (Profit/Net worth)*100 Return on Equity = (1.80/6.00)*100 Return on Equity = 30% Book value per share is = (Net worth/No of outstanding shares) Book value per share is = 6.00/0.50) Book value per share is = $ 121.