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Answer :
The firm's profit margin is 7.11%.
Given data:
Asset Turnover (ATO) = 1.9
Return on Assets (ROA) = 13.5%
Assets (A) = $8,940,000
The formula of Return on assets (ROA) is:
ROA = Net Income / Total Assets
OR ROA = Profit Margin × Asset Turnover
OR Profit Margin = ROA / Asset Turnover
Profit Margin = ROA / Asset Turnover=
13.5% / 1.9= 0.0711 or 7.11%.
Therefore, the company's profit margin is 7.11%.
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