Question

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:...

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:


  Sales $ 10,640,000
  Net operating income $ 744,800
  Average operating assets $ 3,800,000

4.

value:
1.25 points

Required information

Required:
1.

Compute the company's margin, turnover and return on investment (ROI). (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

5.

value:
1.25 points

Required information

2.

The entrepreneur who founded the company is convinced that sales will increase next year by 120% and that net operating income will increase by 340%, with no increase in average operating assets. What would be the company’s ROI? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

6.

value:
1.25 points

Required information

3.

The Chief Financial Officer of the company believes a more realistic scenario would be a $3,500,000 increase in sales, requiring a $618,750 increase in average operating assets, with a resulting $513,660 increase in net operating income. What would be the company’s ROI in this scenario? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

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Answer #1

1) calculate following

Sales 10640000
Net income 744800
Average operating assets 3800000
Margin (744800/10640000) 7%
Turnover (10640000/3800000) 2.8
ROI 19.60%

2) Calculate ROI

Sales (10640000*2.2) 23408000
Net income (744800*4.4) 3277120
Average operating assets 3800000
ROI (3277120/3800000) 86.24%

3) Calculate ROI

Sales 14140000
Net income 1258460
Average operating assets 4418750
ROI 28.48%
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