15 HOMEWORK Help Save & Exit Submit Saved Check my work 5 Exercise 15-13 Return

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15 HOMEWORK Help Save & Exit Submit Saved Check my work 5 Exercise 15-13 Return on investment LO 15-7 Zachary Company calculated its return on investment as 10 percent. Sales are now $490,000, and the amount of total operating assets is $510,000. Required a. If expenses are reduced by $51,000 and sales remain unchanged, what return on investment will result? (Round your answer to 2 ints eBook Hint Print References decimal places. (i.e., .2345 should be entered as 23.450 b. 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 intermediate calculations. Round your answer to the nearest whole dollar amount.) a. Return on investment b. Operating assets must by Mc Graw Hill 3:58

Explanation / Answer

Req a: Total Operating assets: 510000 Return on Investment 10% Net Operating Income 51000 When Expense Reduced by $ 51000 Net Income revised = 51000+51000 = 102000 Total Operating assets: 510000 Return on Investment: Net Income / Total operating assets *100 102000 /510000 *100 = 20% Req b: No change in sales and expense means, Net income: 51000 Return on investment: 20% Revised Total operating assets shall be: 51000/20% = $ 255,000

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