Billy’s Chrystal Stores, Inc., has assets of $5,000,000 and turns over its assets 1.2 times per year. Return on assets is 8 percent.
Well, Billy's Chrystal Stores seems to be doing quite well. With $5,000,000 in assets and turning them over 1.2 times per year, it's safe to say they have a pretty good handle on crystal business. And hey, with a return on assets of 8 percent, they're making some crystal-clear profits. Keep it up, Billy!
To find Billy's Chrystal Stores' net income, we can use the formula:
Net Income = Return on Assets × Total Assets
Given that the Return on Assets is 8 percent and Total Assets are $5,000,000, we can calculate:
Net Income = 0.08 × $5,000,000 = $400,000
Now, to find the sales revenue, we can use the formula:
Sales Revenue = Net Income ÷ Asset Turnover
Given that the Asset Turnover is 1.2 times per year and Net Income is $400,000, we can calculate:
Sales Revenue = $400,000 ÷ 1.2 = $333,333.33 (rounded to the nearest cent)
Therefore, Billy's Chrystal Stores has an annual sales revenue of approximately $333,333.33.
To calculate the net income for Billy's Chrystal Stores, Inc., you can use the return on assets formula. The return on assets is the net income divided by the total assets. Rearranging the formula, we have:
Net Income = Return on Assets * Total Assets
Given that the return on assets is 8 percent and the total assets are $5,000,000, we can calculate the net income as follows:
Net Income = 8% * $5,000,000
Net Income = 0.08 * $5,000,000
Net Income = $400,000
Therefore, Billy's Chrystal Stores, Inc., has a net income of $400,000.
Sales = Assets x Total Asset turnover
Sales = $5,000 x 1.2 = $6,000,000
Net Income = Assets x return on assets
Net income =$5,000,000 x 8% = $400,000
Net Income/Sales = $4,00,000/$6,000,000 = 6.67%