CommercialServices.com Corporation provides business-to-business services on the
ID: 2524816 • Letter: C
Question
CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
2. The entrepreneur who founded the company is convinced that sales will increase next year by 40% and that net operating income will increase by 100%, with no increase in average operating assets. What would be the company’s ROI? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,650,000 increase in sales, requiring a $192,500 increase in average operating assets, with a resulting $190,575 increase in net operating income. What would be the company’s ROI in this scenario?
Sales $ 2,640,000 Net operating income $ 184,800 Average operating assets $ 880,000Explanation / Answer
2) Margin = 369600*100/3696000 = 10%
Turnover = 3696000/880000 = 4.2
ROI = 10%*4.2 = 42%
2) Sales = 2640000+1650000 = 4290000
Net operating income = 184800+190575 = 375375
Average operating assets = 880000+192500 = 1072500
Margin = 375375*100/4290000 = 8.75%
Turnover = 4290000/1072500 = 4
ROI = 8.75%*4 = 35%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.