Question

req. 2b only

aler Company has sales of $1,210,000, cost of goods sold of $735,000, other operating expenses of $148,000, average investea ssets of $3,400,000, and a hurdle rate of 12 percent. Hequired: . Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income 2. Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) . Company sales and cost of goods sold increase by 15 percent. b. Operating expenses increase by $73,000. c. Operating expenses decrease by 10 percent d. Average invested assets decrease by $285,000. e. Kaler changes its hurdle rate to 9 percent. Complete this question by entering your answers in the tabs below. Reg1 Reg 2A Reg 2B Reg 20 Reg 20 Reg 2 Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario's impact on kaler's ROI and residual income. (Note: Treat each scenario independently.) Operating expenses increase by $73,000. (Enter your ROI percentage answers to 2 decimal places (e. 0.1234 should be entered as 12.34 .).) Return on investment Residual income LOSS) < Rey 2A Reg 2 > < Prev 44

Answer 1

Net operating income = 1210000-735000-148000-73000 = 254000

Return on investment = Operating income/Average operating assets = 254000/3400000 = 7.47%

Residual income = 254000-(3400000*12%) = -154000