Question

Required information The following information applies to the questions displayed below) The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue6,800,000 Cost of goods 2,100,000 sold Operating expenses Average invested 1,700,000 capital 4,020,000 E denotes the British pound sterling, the national monetary unit of Great Britain. 3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROl to 45 percent compute the firm's new sales margin. 3-b. Show how the new sales margin and the old capital turnover together result in a new ROl of 45 percent Answer is not complete. Complete this question by entering your answers in the tabs below. Req 3A Req 38 Show how the new sales margin and the old capital turnover together result in a new RO of 45 percent. (Enter "new sales margin" as a percentage rounded to 2 decimal places (Le., 1234 should be entered as 12.34) and "old capital turnover to two decimal places.) Show less 145 1% Req 3A Req 3B >

Answer 1

Req 3-a
ROI required			45%
Average Invested Capital			1700000
Net income (1700000*45%)			765000
Divide: Sales revenue			6800000
Profit margin			11.25%
Req 3-b
Assets turnover = Sales / Average invested capital
		6800000 /1700000 = 4
New Roi =    Profits margin      *			Turnover
New Roi =         11.25%   *			4     =	45%