Question

Last year Electric Autos had sales of $100 million and assets at the start of the year of $150 million. If its return on start-of-year assets was 15%, what was its operating profit margin?

Answer 1

22.50%

Step-by-step explanation:

Amount of return on asset = Rate of return * Asset value

Amount of return on asset = 15% * $150 million

Amount of return on asset = $22.5 million

Operating profit margin = Amount of return on asset / Sales

Operating profit margin = $22.5 million / $100 million

Operating profit margin = 0.225

Operating profit margin = 22.50%