Baker Oats had an asset turnover of 1.8 times per year.         If the return on total assets (investment) was 13 percent, what was Baker’s profit margin?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 5EA: During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of...
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Baker Oats had an asset turnover of 1.8 times per year.        
If the return on total assets (investment) was 13 percent, what was Baker’s profit margin? 

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Step 1

Return on assets = Profit margin x Asset turnover ratio

Profit margin = Return on assets/Asset turnover ratio

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