Krall company recently had a computer malfunction and lost a portion of its acco

Question

Krall company recently had a computer malfunction and lost a portion of its accounting records. The company has reconstructed some of its financial performance. Measurements including components of the return on investment calculations.

** I know it is a little hard to read my screen. I'm very sorry. I recently dropped my laptop.

C Chegg Study |Gu X Confirm youracc x Home- my.utrg CH 10 Quiz Oezto. mh E] to, search ( 90% Most Visited my.utrgv.eduALGEBRA Login Search everything on 2. Krall Company recently had a computer malfunction and lost a portion of its accounting records The company has reconstructed some of its financial performance measutemen components of the return on investment calculations Required Help Krall rebuild its information database by completing the following Eable to not tournd your intermediate calculations. Round your final answers to 2 d should be entered as 12.34% Return on nvestment Profit Investment Operatings Sa Turnover Income S 48,000.00 i9 030051521.000 o0 11.00% 0.42 S 124 278.00 1.20 260 15.001% 12.80 Macro II Sc2 1080 30 29... Chapter 10 test bank_o. Study Notes

Explanation / Answer

Case A:

Profit Margin = Operating Income / Sales Revenue
Profit Margin = $48,000 / $709,000
Profit Margin = 6.77%

Investment Turnover = Sales Revenue / Average Invested Assets
Investment Turnover = $709,000 / $1,520,000
Investment Turnover = 0.47

Return on Investment = Operating Income / Average Invested Assets
Return on Investment = $48,000 / $1,520,000
Return on Investment = 3.16%

Case B:

Profit Margin = Operating Income / Sales Revenue
0.11 = $124,278 / $709,000
Sales Revenue = $1,129,800

Return on Investment = Operating Income / Average Invested Assets
Return on Investment = $124,278 / $2,690,000
Return on Investment = 4.62%

Case C:

Profit Margin = Operating Income / Sales Revenue
0.15 = Operating Income / $2,136,000
Operating Income = $320,400

Investment Turnover = Sales Revenue / Average Invested Assets
1.20 = $2,136,000 / Average Invested Assets
Average Invested Assets = $1,780,000

Return on Investment = Operating Income / Average Invested Assets
Return on Investment = $320,400 / $1,780,000
Return on Investment = 18.00%

Case D:

Investment Turnover = Sales Revenue / Average Invested Assets
2.60 = $513,000 / Average Invested Assets
Average Invested Assets = $197,307.69

Return on Investment = Operating Income / Average Invested Assets
0.1280 = Operating Income / $197,307.69
Operating Income = $25,255.38

Profit Margin = Operating Income / Sales Revenue
Profit Margin = $25,255.38 / $513,000
Profit Margin = 4.92%

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