Ch 11 #4-6 CommercialServices.com Corporation provides business-to-business serv

Question

Ch 11 #4-6

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Compute the company's margin, turnover and return on investment (ROI). (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34%.))

Margin- ____%

Turnover- ___

ROI- ____ %

The entrepreneur who founded the company is convinced that sales will increase next year by 120% and that net operating income will increase by 340%, with no increase in average operating assets. What would be the company’s ROI? (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34%.))

Margin- ___%

Turnover- ____

ROI- ____%

3. The Chief Financial Officer of the company believes a more realistic scenario would be a $5,000,000 increase in sales, requiring a $1,850,000 increase in average operating assets, with a resulting $1,043,400 increase in net operating income. What would be the company’s ROI in this scenario? (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34%.))

Margin- ___%

Turnover- ___

ROI- ____%

[The following information applies to the questions displayed below.]

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

4:12 PM ezto.mheducation.com .11 Sprint? The fowowing information appies to the questions displayed below) business services on the Internet. Data concerning the most recent year appear below s 21800 4 100 paint Required: . Compute the company's margin, turnover and return on nvestment (ROI). (Do not round intermediate calculations Round your percentage answers to 2 decimal places (e., 0.1234 should be considered as 12.34%.)) References Bo& Resourees 5 100nt The entrepreneur who founded the company is convinced that sales will increase next year by 120% and that net operating income will increase by 340%, with no increase in average operating assets. What would be the company's ROI? (Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e., 0.1234 should be considered as 12.34%.)) eerences Book& Resources

Explanation / Answer

1 Margin = Net operating income/Sales = $1749600/$21600000 = 8.10% Turnover = Sales/Average operating assets = $21600000/$4800000 = 4.5 ROI = Margin x Turnover = 8.10% x 4.5 = 36.45% 2 Margin = Net operating income/Sales = $7698240/$47520000 = 16.20% Net operating income = $1749600 x (1.00 + 3.40) = $7698240 Sales = $21600000 x (1.00 + 1.20) = $47520000 Turnover = Sales/Average operating assets = $47520000/$4800000 = 9.9 ROI = Margin x Turnover = 16.20% x 9.9 = 160.38% 3 Margin = Net operating income/Sales = $2793000/$26600000 = 10.50% Net operating income = $1749600 + $1043400 = $2793000 Sales = $21600000 + $5000000 = $26600000 Turnover = Sales/Average operating assets = $26600000/$6650000 = 4 Average operating assets = $4800000 + $1850000 = $6650000 ROI = Margin x Turnover = 10.50% x 4 = 42.00%

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