Make big profit

One Response to “A firm’s annual sales amount to 4 times its total assets. It’s profit on sales is 2.4%?”

1. Sandy, on August 29th, 2010 at 4:19 am Said:

   Let Sales = S and Assets = A, so S=4A
   Profit on S = 2.4% or put another way,
   Profit on 4A = 2.4%
   So rate of profit on its total assets is 9.6%.
   Check it out with a simple example. Let’s say Assets = $1,000, so Sales must be $4,000. Profit on Sales is 2.4% = $96. So a profit of $96 was made. $96 as a percentage of Assets of $1,000 is 96/1000 x 100 = 9.6%

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