Given the following data: 16.0% 12.0% 52.0% 39.0% CS Company has a profit margin

Question

Given the following data:

16.0%

12.0%

52.0%

39.0%

CS Company has a profit margin of 8%. Sales are $565,000, net operating income is $45,200, and average operating assets are $139,000. What is the company's return on investment (ROI)?

4.1

8.0%

32.5%

0.2

Last year a company had sales of $340,000, a turnover of 2.5, and a return on investment of 47.5%. The company's net operating income for the year was:

$96,900

$136,000

$161,500

$64,600

For the past year, Allargando Company recorded sales of $423,000 and average operating assets of $282,000. What is the margin that Allargando Company needed to earn in order to achieve an ROI of 27%?

18%

27%

1.5%

3.7%

Chabot Company had the following results last year: net operating income, $8,930; turnover, 4; and ROI 19%. Chabot Company's average operating assets were:

$4,241,750

$3,572,000

$35,720

$47,000

  Average operating assets $1,372,000   Total liabilities $144,060     Sales $1,029,000     Contribution margin $535,080     Net operating income $164,640  

Explanation / Answer

1) ROI=Net operating income/Avg operating assets = 164640/1372000 = 12%

2) ROI=Net operating income/Avg operating assets = 45200/139000 = 32.5%

3) Operating assets = Sales/Turnover ratio=340000/2.5 = 136000

Operating income = Operating assets * ROI = 136000*47.5% = 64600

4) Margin = Desired profit / sales =282000*27%/423000= 18%

5) Average operating assets = Net operating income/ROI =8930/19% = 47000

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