Question

Last year Electric Autos had sales of $190 million and assets at the start of the year of $330 million. If its return on start-of-year assets was 15%, what was its operating profit margin

Answer 1

Answer:

2.61%

Explanation:

The first step is to calculate the operating income

= ROE × assets

= 15/100 × $330,000,000

= 0.15 × $330,000,000

= $49,500,000

Therefore the operating profit margin can be calculated as follows

= operating income/sales

= $49,500,000/190,000,000

= 0.2605 × 100

= 2.61 %