The appropriate measure here is ret

The appropriate measure here is return on assets, not return on sales, and .it is likely that Barrington Products has at least a 15 percent ROA. To get a 15 percent ROA with $3.4 million in net income, the company should have no more than $22.5 million in assets. There is evidence to suggest that, other than artificial fiber and artificial leather, each division's plant is fully depreciated (they were purchased some 20 or 30 years ago in an industry with slow technological change!). Certainly, their equipment is fully depreciated. Assuming low inventories and low A/R, it is quite likely that total assets are below the $22.5 million figure.Of course, on a replacement cost basis, the ROA would likely be well below 15 percent. Thus,as an investor, my main concern would be BPUs ability to replace its fixed assets when they wearout. This would entail comparing the replacement cost ROA to the inflation rate for the kinds ofplant and equipment that BPI uses. We cannot do this from the information in the case.