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

Okay let's do it. XYZ company had a profit margin of 8.8%, and a total asset turnover of 0.77. What is XYZ's return on assets? So remember when we first learned about return on assets, we talked about net income divided by average total assets, they don't give us any of that information here. We have to decompose it like we learned with the profit margin and total asset turnover. So just by multiplying these two numbers together, we're going to get our return on assets, Okay? So when they give me a percentage and a decimal, you could actually, in this case, just multiply the 2. 8.8x.77 and it gives you it as a percentage already. Sometimes that confuses me and I don't like to risk it. So I always go back to a decimal and then go back to percentage at the end. So, let's do it. ROA, I'm going to turn this 8.8% into 0.088. 8. And I just do it because I'm paranoid, I don't want to mess up. I just put it as a decimal. But I but if you hadn't done it, you're still going to get the right answer, right? And then, so our profit margin times our total asset turnover, 0.77, right? If we multiply these together, we're gonna get our answer. So point 088 times point, 07 0.77. Sorry. This multiplication that I wrote right here, it comes out to 0.067 76, right? That's what we get. What we rounded off, it looks like they rounded it to 3 decimals here. We move our decimal two places and we get 6.7 approximately 8 here. 6.78 percent and that's gonna be our answer, right? 6.78%. Cool? So that tells us our return on assets, 6.78%. A different way to calculate it, right? Alright. Let's go ahead and move on to the next question.

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

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