Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 3, Problem 3.11E
Exercise 3.11
LO 3
- Firm A has a margin of 8%, sales of $630,000, and ROI of 16.8%. Calculate the firm’s average total assets.
- Firm B has net income of $246,400, turnover of 1.1, and average total assets of $1,600,000. Calculate the firm’s sales, margin, and ROI. Round your percentage answer to one decimal place.
- Firm C has net income of $43,500, turnover of 2.9, and ROI of 23.2%. Calculate the firm’s margin, sales, and average total assets. Round your percentage answer to one decimal place.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Exercise 3-11 (Algo) ROI analysis using the DuPont model LO 3
Required:
a. Firm A has a margin of 13%, sales of $510,000, and ROI of 18%. Calculate the firm's average total assets.
b. Firm B has net income of $72,000, turnover of 1.50, and average total assets of $880,000. Calculate the firm's sales, margin,
and ROI.
c. Firm C has net income of $136,000, turnover of 1.91, and ROI of 23.20%. Calculate the firm's margin, sales, and average total
assets.
O Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Firm C has net income of $136,000, turnover of 1.91, and ROI of 23.20%. Calculate the firm's margin, sales, and average
total assets. (Round "Margin" answer to 1 decimal place and use the rounded answer for the subsequent computations.)
Margin
12.1 O %
Sales
$ 1,119,655 X
Average total
assets
2$
586,207 X
Question 3
You have been presented with the following information :
Customer Perspective
Actual Performance
$6.5 mil
Targets
a. Total Sales
$ 10 mil
b. No. of Stock Returns
10
20
Internal Business Perspective
a. Maintenance Costs
b. No of Workers (production)
Targets
$200k
Actual Performance
$50k
30
15
Financial Perspective
Actual Performance
Targets
$4mil
a. Net Profit
$1mil
b. Asset Turnover ratio
15 times
20 times
Innovation & Growth Perspective
Targets
$100k
Actual Performance
$20k
a. Training Costs
b. No of Staff (Marketing)
20
12
Other information obtained are customers are frequently complaining and cancelling orders and
machines breakdowns.
Required :
i) Comment on the performance.
ii) Propose suggestion to improve.
Chapter 10: Applying Excel: Exercise (Part 2 of 2)
Requirement 2:
Revise the data in your worksheet as follows:
A
1 Chapter 10: Applying Excel
2
3
Data
4 Sales
5
6
7
Net operating income
ROI
Average operating assets
Minumum required rate of return
If your formulas are correct, you should get the correct answers to the following questions.
a. What is the ROI?
Residual income
B
%
c. Why is the residual income positive?
$ 64,000,000
$ 7,680,000
$ 16,000,000
25%
b. What is the residual income? (Negative amount should be indicated by a minus sign.)
Chapter 3 Solutions
Accounting: What the Numbers Mean
Ch. 3 - Prob. 3.1MECh. 3 - Mini-Exercise 3.2 LO 3 ROI analysis using the...Ch. 3 - Mini-Exercise 3.3 LO 4 Calculate ROE Firm L had...Ch. 3 - Prob. 3.4MECh. 3 - Mini-Exercise 3.5 LO 6 Calculate current...Ch. 3 - Mini-Exercise 3.6 LO 6 Calculate working capital...Ch. 3 - Exercise 3.7 LO 2 Compare investment alternatives...Ch. 3 - Prob. 3.8ECh. 3 - Exercise 3.9 LO 2 Compare investment alternatives...Ch. 3 - Exercise 3.10 LO 2 Compare investment alternatives...
Ch. 3 - Exercise 3.11 LO 3 ROI analysis using the DuPont...Ch. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Exercise 3.15 LO 6 Effect of transactions on...Ch. 3 - Exercise 3.16 LO 6 Effect of transactions on...Ch. 3 - Calculate profitability measures using annual...Ch. 3 - Prob. 3.18PCh. 3 - Problem 3.19 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.20 LO 6 Calculate and analyze liquidity...Ch. 3 - Problem 3.21 LO 3 Applications of ROI using the...Ch. 3 - Prob. 3.22PCh. 3 - Case 3.23 LO 3. 4, 6, 2 Focus company-analysis of...Ch. 3 - Case 3.24 LO 3, 4, 6, 7 Analysis of liquidity' and...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 1. Chapter 11: Applying Excel Data $ 72,000,000 $ 3,600,000 $ 18,000,000 24% 4 Sales Net operating income 6. Average operating assets 7 Minumum required rate of return If your formulas are correct, you should get the correct answers to the following questions. a. What is the ROI? ROI % b. What is the residual income? (Nagative amount should be indicated by a minus sign.) Residual income c. Why is the residual income negative? 2. 5.arrow_forwardRequirement 2: Revise the data in your worksheet as follows: A 1 Chapter 11: Applying Excel 2 3 Data 4 Sales 5 6 7 Net operating income Average operating assets Minumum required rate of return ROI If your formulas are correct, you should get the correct answers to the following questions. a. What is the ROI? $ 24,000,000 $ 3,360,000 $ 6,000,000 24% % Residual income b. What is the residual income? (Negative amount should be indicated by a minus sign.) c. Why is the residual income positive? The ROI exceeds the minimum required rate of returnarrow_forwardUse the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 $ Company Y $ 28,480,000 $ 7,120,000 512,640 8.50% Company Z $ 20,480,000 $ 5,120,000 532,480 10.40% Sales Average operating assets Net operating income Minimum required rate of return 561,600 8.00% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg ЗA Req 3B Compute the return on investment (ROI) for each company…arrow_forward
- Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 561,600 8.00% Company Y $ 28,480,000 $ 7,120,000 2$ Company Z $ 20,480,000 $ 5,120,000 532,480 Sales Average operating assets Net operating income Minimum required rate of return $ 512,640 8.50% 10.40% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req ЗA Req 3B Each company is presented with an investment…arrow_forwardSegment profitability analysis The marketing segment sales for Caterpillar, Inc., for a year follow: In addition assume the following information: A. Use the sales information and the additional assumed information to prepare a contribution margin by segment report. Round to two decimal places. In addition, calculate the contribution margin ratio for each segment as a percentage, rounded to one decimal place. B. Prepare a table showing the manufacturing margin, dealer commissions, and variable promotion expenses as a percent of sales for each segment. (Round whole percents to one decimal place.) C. Use the information in (A) and (B) to interpret the segment performance.arrow_forwardCase 1: ROI You are comparing the performance of two (2) separate divisions, segments A and B, using ROI Analysis. A в P100,000.00 P500,000.00 30,000.00 Sales Operating Expenses 300,000.00 Net Operating income 70,000.00 200,000.00 Average Operating Assets 10,000.00 40,000.00 Required: Using ROI Analysis, which segment is performing better? To answer this question, you need to: 1. Compute the ROi of each segment and 2. Compute the components of ROI of each segmentarrow_forward
- QUESTION 31 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 1 2 3 Sales $10,000,000 $9,000,000 $6,000,000 Operating income 200,000 300,000 300,000 Average operating assets 2,000,000 3,000,000 3,000,000 Minimum required rate of return = 8% Evaluate the three investment choices: Each investment choice has the same ROI, 10 percent. Choices 2 & 4 have a higher residual income then Choice 1, but that is to be expected given that they appear to be larger. Because residual income is an absolute measure, it should not be used to compare investment centers of different size. In general, larger investment centers should have larger residual incomes. Each investment choice has a different ROI. Choices 2 & 3 have a higher residual income then Choice 1, but that is to be expected given that…arrow_forwardAccelerated Logistics provides the following information: $1,600,000 $15,000,000 $1,800,000 Operating income Net sales Average total assets Management's target rate of return 25% What is the company's profit margin ratio? (Round your answer to two decimal places.) ..... A. 12.00% B. 88.89% C. 27.90% D. 10.67%arrow_forwardchpater 6 question 6 Assume a company with two divisions (A and B) prepared the following segmented income statement: A B Total Sales $ ? $ 200,000 $ ? Variable expenses 120,000 140,000 260,000 Contribution margin ? ? ? Traceable fixed expenses 100,000 ? ? Segment margin $ ? $ (20,000 ) ? Common fixed expenses 50,000 Net operating income $ 10,000 What is the company’s total sales? Multiple Choice $500,000 $600,000 $480,000 $460,000arrow_forward
- Profit Margin, Investment Turnover, and ROI Briggs Company has income from operations of $17,800, invested assets of $89,000, and sales of $178,000. Use the DuPont formula to compute the return on investment. If required, round your answers to two decimal places. a. Profit margin fill in the blank 1 % b. Investment turnover fill in the blank 2 c. Return on investment fill in the blank 3 %arrow_forward13- It is in the interest of top management to know the profit margin at multiple points for decision making. Therefore, the management of the firm wants to estimate the gross profit ratio with the sales of OMR 65000 and cost of goods sold OMR 32000. Find out the gross profit ratio for the management. a. 60% b. 51% c. 40% d. None of the optionsarrow_forwardQuestion 14 The cost function for Ciao Company is: TC = $800+ 0.375 × Revenue. If Ciao expects after-tax income of $600, and the tax rate is 40%, what is the firm's margin of safety in $?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License