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 $ 18,900,000 $ 6,200,000 $ 35,500,000 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

1. Ratio Calculations -

1 Margin Net Operating Income Sales $ 6,200,000 $ 18,900,000 = 33% II 2 Turnover Sales Average Operating assets $ 18,900,000 $35,500,000 0.53 3 ROI Net Operating Income Average Operating assets $ 6,200,000 $35,500,000 17%

1. Margin - Margin indicates the profit margin available in the income generated through sales. Net operating profit shows the income earned by the company after incurring all the operating expenses.

2. Turnover - Assets Turnover shows the how much company generated sales from the investments in the assets. It show the efficiency of the company on the utilisation of the assets.

3. ROI - This ratio indicates the return earned by the company from the investment made in the assets.

2. Conclusion -

1 33% Margin Turnover 2 0.53 3 ROI 17%