Homework Answers
Part a. is correct.
b.
| ROI | ||
| Original data | 16.0 | % |
| Corrected data | 14.4 | % |
Working:
ROI = Operating income/Average total assets
Original data: $156000/$977000 = 15.97 = 16.0
Average total assets = ($943000 + $1011000)/2 = $1954000/2 = $977000
Corrected data: $140000/$969000 = 14.4%
Corrected year-end assets = $1011000 - ($20000 - $4000) = $1011000 - $16000 = $995000
Average total assets = ($943000 + $995000)/2 = $1938000/2 = $969000
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