Question

GoodTimes, Inc. has asset turnover of 0.5 times, a net profit margin of 10% and average total assets of $100, what is its net income (assuming no unusual items)?

Answer 1

$5

Step-by-step explanation:

Given that,

Asset turnover ratio = 0.5 times

Net profit margin = 10 percent

Average total assets = $100

Asset turnover ratio = sales ÷ Total asset

0.5 = sales ÷ $100

sales = $50

Profit margin = Net income ÷ sales

0.10 = Net income ÷ $50

Net income = $5

Therefore, the net income of GoodTimes, Inc. is $5.