3BP Polly Esther Dress Shops Inc. ca... [FREE SOLUTION]

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 3BP (page 78)

Polly Esther Dress Shops Inc. can open a new store that will do an annual sales volume of $837,900. It will turn over its assets 1.9 times per year. The profit margin on sales will be 8 percent. What would net income and return on assets (investment) be for the year?

Expert verified

The net income of the company is $67,032, and the return on assets for the year is 15.20%.

$N e t i n c o m e = S a l e s 脳 P r o f i t m a r g i n = $ 837, 900 脳 8 % = $ 67, 032$

$A v e r a g e T o t a l a s s e s t s = \frac{N e t s a l e s}{A s s e s t s t u r n o v e r r a t i o s} = \frac{$ 837, 900}{1.90} = $ 441, 000$

$R e t u r n o n a s s e s t s = \frac{N e t I n c o m e}{T o t a l A s s e s t s} = \frac{$ 67, 032}{$ 441, 000} = 15.20 %$

Unlock Step-by-Step Solutions & Ace Your Exams!

Over 30 million students worldwide already upgrade their learning with 91影视!

All the tools & learning materials you need for study success - in one app.

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Indicate whether item is on Balance sheet (BS) or Income statement (IS)	If on Balance sheet, designate which category	Item
		Accounts receivable
		Retained earnings
		Income tax expense
		Accrued expense
		Cash
		Selling and administrative expenses
		Plant and equipment
		Operating expenses
		Marketable securities
		Interest expense
		Sales
		Notes payable (6 month)
		Bonds payable, maturity 2019
		Common stock
		Depreciation expense
		Inventories
		Capital in excess of par value
		Net income (earning after tax)
		Income tax payable