To calculate the total sales and total asset turnover, you will need the operating margin, pretax operating return on total assets, and average total assets.
1. Calculate Total Sales:
The operating margin is given as 6%. The formula to calculate the operating margin is:
Operating Margin = (Operating Income / Total Sales) * 100
From the given information, we have the operating income as $60,000,000. Rearranging the formula, we get:
Total Sales = (Operating Income / Operating Margin) * 100
Total Sales = ($60,000,000 / 6%) * 100
Total Sales = $1,000,000,000
Therefore, the total sales amount to $1,000,000,000.
2. Calculate Total Asset Turnover:
The pretax operating return on total assets is provided as 12%. The formula to calculate the total asset turnover is:
Total Asset Turnover = Pretax Operating Return on Total Assets / Operating Margin
From the given information, the pretax operating return on total assets is 12% and the operating margin is 6%. Substituting these values into the formula, we get:
Total Asset Turnover = 12% / 6%
Total Asset Turnover = 2
Therefore, the total asset turnover is 2.
In summary, the total sales amount to $1,000,000,000, and the total asset turnover is 2.