Profit margin 753 return on equity 1583 return on assets

Profit margin = 7.53%, return on equity = 15.83%, return on assets = 9.72%. What is the total asset turnover? Please show all steps.

Solution

Profit Margin=Net profit/Net sales =7.53%

Return on Asset=Net Profit/ Net Asset=9.72%

If we divide Profit Margin by ROA, it will give Net Asset/Net Sales = 0.77

Total Asset Turnover = Net Sales/ Net Asset = 1/0.77= 1.29