Exercise 12-22 Return on Investment, Margin, Turnover Data follow for the Constr
ID: 2420200 • Letter: E
Question
Exercise 12-22 Return on Investment, Margin, Turnover
Data follow for the Construction Division of D. Jack Inc.:
Year 1
Year 2
Sales
$148,500,000
$162,250,000
Operating income
8,910,000
8,112,500
Average operating assets
337,500,000
405,625,000
(Note: Round all answers to two decimal places.)
Required:
1.Compute the margin and turnover ratios for each year.
2.Compute the ROI for the Construction Division for each year.
Year 1
Year 2
Sales
$148,500,000
$162,250,000
Operating income
8,910,000
8,112,500
Average operating assets
337,500,000
405,625,000
Explanation / Answer
Year 1
Year 2
Margin Ratio Net Income/Net Sales
$8910000/148500000
$8112500/$162250000
6%
5%
Turnover ratio Net Sales/Average Total Assets
$148500000/$337500000
$162250000/$405625000
44%
40%
ROI Gain from Investment/Cost of investment
$8910000/$337500000
$8112500/$405625000
2.64%
2%
Year 1
Year 2
Margin Ratio Net Income/Net Sales
$8910000/148500000
$8112500/$162250000
6%
5%
Turnover ratio Net Sales/Average Total Assets
$148500000/$337500000
$162250000/$405625000
44%
40%
ROI Gain from Investment/Cost of investment
$8910000/$337500000
$8112500/$405625000
2.64%
2%
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