Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,390,000 in annual sales, with an 6 percent profit margin. What would net income and return on assets (investment) be for the year?
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $380,000. It is estimated that Database can generate $1,390,000 in annual sales, with an 6 percent profit margin.
What would net income and
Net Income: The net income of the business is determined by subtracting the total expenses from the total revenue. It is the net profit of the company earned during the period which is generally determined by preparing the income statement.
Return on Investment or asset: It establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.
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