Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 3.21P
Problem 3.21
LO 3
Applications of
Required:
a. Calculate net income, margin, and sales required for Manyops, Inc., to achieve its target ROI as a manufacturing firm.
b. Assume that the average margin of maintenance service firms is 2.5%, and that the average ROI for such firms is also 1896. Calculate the net income, sales, and total asset turnover that Manyops, Inc., will have if the change to services is made and the firm is able to earn an average margin and achieve an 1896 ROI.
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Students have asked these similar questions
The South Division of Wiig Company reported the following data for the current year.
Sales
Variable costs
Controllable fixed costs
Average operating assets
1.
2
$3,000,000
1,950,000
Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to
submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of
action.
3.
600,000
5,000,000
Increase sales by $300,000 with no change in the contribution margin percentage.
Reduce variable costs by $150,000.
Reduce average operating assets by 6.25%.
(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)
Case 1: ROI
You are comparing the performance of two (2) separate divisions, segments A and B, using ROI Analysis.
A
B
Sales
P100,000.00
P500,000.00
Operating Expenses
30,000.00
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:
Compute the ROI of each segment and
Compute the components of ROI of each segment
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…
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...
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