Homework Answers
Existing return on profit = $460000*10% = $46000
A) with decrease in expense there will be a increase in profit.
New profit = $43700 + $46000 = $89700
Return on investment = $89700/$460000 ,= 19.5 %
B) investment required = profit required / rate
= $89700/10%
= $897000
Less existing = $460000
Chang required = $897000 - $460000 = $437000
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percent. Sales are now $370,000, and the amount of total operating
assets is $390,000.
Required
If expenses are reduced by $31,200 and sales remain unchanged,
what return on investment will result? (Round your answer
to 2 decimal places. (i.e., .2345 should be entered as
23.45).)
If both sales and expenses cannot be changed, what change in the
amount of operating assets is required to achieve the same result?
(Do not round...
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Problem 15-22 Return on investment LO 15-6
Gibson Corporation’s balance sheet indicates that the company
has $580,000 invested in operating assets. During 2018, Gibson
earned operating income of $67,280 on $1,160,000 of sales.
Required
Compute Gibson’s profit margin for 2018.
Compute Gibson’s turnover for 2018.
Compute Gibson’s return on investment for 2018.
Recompute Gibson’s ROI under each of the following independent
assumptions:
(1) Sales increase from $1,160,000 to $1,392,000, thereby resulting
in an increase in operating income from $67,280 to...
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