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If a companys profit margin is 4 % and its total asset turnover ratio is 2.8, what is its return on assets (ROA)? Enter your
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Answer #1

ROA = Net Income/Total Assets

Dividend and Multiply the Equation by Sales

ROA = Net Income/Total Assets * (Sales/Sales)

ROA = (Net Income/Sales) * (Sales/Total Assets)

ROA = Net profit margin * Asset turnover

ROA = 4% * 2.8

ROA = 11.20%

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