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 | $ | 18,500,000 |
| Net operating income | $ | 5,800,000 |
| Average operating assets | $ | 35,100,000 |
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.)
Explanation
1.
| Margin | = | Net operating income | |
| Sales | |||
| = | $5,800,000 | = 31.35% | |
| $18,500,000 | |||
2.
| Turnover | = | Sales | |
| Average operating assets | |||
| = | $18,500,000 | = 0.53 | |
| $35,100,000 | |||
3.
| ROI | = Margin × Turnover |
| = 31.35% × 0.53 = 16.62% |
Thanks
