Provide the missing data in the following table for a distributor of martial arts products: (Enter "Turnover" and "ROI" answers to 1 decimal place.) Sales Net operating income Average operating assets Margin Turnover Return on investment (ROI) X Answer is complete but not entirely correct. Division Bravo Alpha $ 1,496,000 $ 119,680✔ $ 374,000 8 4.0 32.0 ✓ % % $ 260,000 $ 41,600 $1,300 x 16✓ % 200.0 X 32.0 % Charlie $ 650,000 X $ 46,800 $ 433,333 X 15 1.5✔ 22.5 % %
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- Exercise 12-9 Return on Investment (ROI) and Residual Income Relations [LO12-1, LO12-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to nearest whole number.) Company A B C Sales $310,000 $770,000 $670,000 N. Oper Inc. $45,000 Avg. Oper. Ass. $165,000 $141,000 ROI 18% 17% % Minimum required rate of return: Percentage 16% % 13% Dollar…Provide the missing data in the following table for a distributor of martial arts products:DivisionAlpha Bravo CharlieSales ......................................................................... $ ? $11,500,000 $ ?Net operating income ............................................... $ ? $ 920,000 $210,000Average operating assets ......................................... $800,000 $ ? $ ?Margin ....................................................................... 4% ? 7%Turnover ................................................................... 5 ? ?Return on investment (ROI) ...................................... ? 20% 14%CH11_HW_QA3_LA Required 1: Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answer to 2 decimal places.) Margin % Turnover ROI % Required 2: Using Lean Production, the company is able to reduce the average level of inventory by $95,000. (The released funds are used to pay off short-term creditors.) (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % Required 3: The company achieves a cost savings of $14,000 per year by using less costly materials. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % Required 4: The company issues bonds and uses the proceeds to…
- Q7 Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 1,500,000 $ 1,000,000 Operating Income $ 600,000 $ 450,000 Investment $ 4,000,000 $ 2,750,000 If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide? Multiple Choice Division P will not invest; Division Q will invest. Division P will invest; Division Q will not invest. Neither unit will invest in the projects. Division P will be indifferent; Division Q will not invest. Division P will invest; Division Q will be indifferent.hw6 q8 King Mattresses sells both mattress sets and bed frames. Last quarter, total sales were $62,000 for mattress sets and $31,000 for bed frames. Return on investment (ROI) was 20% for both divisions, while asset turnover (AT) was 5 for mattress sets and 2 for bed frames. Compute King Mattresses’s total return on sales (ROS) for the quarter.E6.14 (LO 4), AN The single-column CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co.Sales $500,000 $500,000Variable costs 240,000 50,000Contribution margin 260,000 450,000Fixed costs 160,000 350,000Net income $100,000 $100,000Instructions Compute the degree of operating leverage for each company and interpret your results.Assuming that sales revenue increases by 10%, restate the single-column CVP income statement from above for each company.Discuss how the cost structure of these two companies affects their operating leverage and profitability.Compute degree of operating leverage and evaluate impact of alternative cost structures on net income and margin of safety.
- Provide the missing data in the following tabulation: Division Alpha Bravo Charlie Revenue 11500000 Operating profit 920000 210000 Average operating assets 800000 Margin 4,00% 7,00% Turnover 5 Return on investment (ROI) 20% 14%Management is considering the discontinuance of the manufacture and sale of Product G2 at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F1 and H3. What is the amount of change in net income for the current year that will result from the discontinuance of Product G2? P30,000 decrease P20,000 decrease P20,000 increase P30,000 increase(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
- CH11_HW_QA3_PIR Required 1: Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answer to 2 decimal places.) Margin not attempted % Turnover not attempted ROI not attempted % Required 2: Using Lean Production, the company is able to reduce the average level of inventory by $96,000. (The released funds are used to pay off short-term creditors.) (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % Required 3: The company achieves a cost savings of $14,000 per year by using less costly materials. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % Required 4: The…Communication The Norse Division of Gridiron Concepts Inc. experienced significant revenue and profit growth from 20Y4 to 20Y6 as shown in the following divisional income statements: There are no support department allocations, and the division operates as an investment center that must maintain a 15% return on invested assets. Determine the profit margin, investment turnover, and return on investment for the Norse Division for 20Y420Y6. Based on your computations, write a brief memo to the president of Gridiron Concepts Inc., Knute Holz, evaluating the divisions performance.Effect of proposals on divisional performance A condensed income statement for the Jet Ski Division of Amazing Rides Inc. for the year ended December 31. 20Y2, is as follows Assume that the Jet Ski Division received no charges from service departments. The president of Amazing Rides has indicated that the division's rate of return on a $15,000,000 investment must be increased to at least 12% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of J3.000.000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $264,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $480,000. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,000,000 for the year. Proposal 5? Reduce invested assets by discontinuing the tandem jet ski line. This action would eliminate sales of $2,280,000, cost of goods sold of $1,400,000, and operating expenses of $463,600. Assets of $4,200,000 would be transferred to other divisions at no gain or loss. Instructions Which of the three proposals would meet the required 12% return on investment?'