XYZ Company had a profit margin of 8.8% and total asset turnover of 0.77. What is XYZ's Return on Assets?

• A. 6.78%
• B. 0.07%
• C. 11.43%
• D. 9.57%

Answer: (A)

Verified step by step guidance

1. Understand the formula for Return on Assets (ROA), which is: \( \text{ROA} = \text{Profit Margin} \times \text{Total Asset Turnover} \).
2. Identify the given values in the problem: Profit Margin is 8.8% and Total Asset Turnover is 0.77.
3. Convert the percentage value of the Profit Margin into a decimal for calculation purposes: 8.8% becomes 0.088.
4. Substitute the values into the ROA formula: \( \text{ROA} = 0.088 \times 0.77 \).
5. Perform the multiplication to find the ROA, which will give you the percentage that represents the Return on Assets for XYZ Company.