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 Net operating income Average operating assets $ $ $ 18,000,000 5,600,000 35,300,000 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.) 1. Margin 2. Turnover 3. ROI

Answer 1

Question 1

To find the margin, the net operating income is to be divided by the sales and multiplied by 100.

Margin = Net operating income/Sales*100

Margin = 5,600,000/18,000,000*100

Margin = 31.11%

Question 2

Since the sales and average operating assets are given we need to find the asset turnover ratio.

Asset turnover ratio measured the efficiency of the company in using of asset to generate the sales.

Asset turnover ratio = Sales/average operating assets

Asset turnover ratio = 18,000,000/35,300,000

Asset turnover ratio = 0.51

Question 3

Return on investment provides the percentage of return on the investment made.

Return on investment (ROI) = Net operating income/Average operating assets *100

Return on investment (ROI) = 5,600,000/35,300,000×100

Return on investment (ROI) = 15.86%