CommercialServices.com Corporation provides business-to-business services on the

Question

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

References

Section BreakExercise 9-13 Effects of Changes in Sales, Expenses, and Assets on ROI [LO9-1]

3.

value:
3.75 points

Required information

Exercise 9-13 Part 1

Compute the company's margin, turnover and return on investment (ROI). (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

References

eBook & Resources

WorksheetDifficulty: 2 Medium

Exercise 9-13 Part 1Learning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

4.

value:
3.75 points

Required information

Exercise 9-13 Part 2

The entrepreneur who founded the company is convinced that sales will increase next year by 160% and that net operating income will increase by 420%, with no increase in average operating assets. What would be the company’s ROI? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

References

eBook & Resources

WorksheetDifficulty: 2 Medium

Exercise 9-13 Part 2Learning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

5.

value:
3.75 points

Required information

Exercise 9-13 Part 3

The Chief Financial Officer of the company believes a more realistic scenario would be a $4,000,000 increase in sales, requiring a $840,000 increase in average operating assets, with a resulting $610,250 increase in net operating income. What would be the company’s ROI in this scenario? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

     

References

eBook & Resources

WorksheetDifficulty: 2 Medium

Exercise 9-13 Part 3

[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:

Explanation / Answer

Part 1:

Margin

Net operating income/Sales

1058200/9620000

11%

Turnover:

Sales/Average operating assets

9620000/3700000

2.6

ROI:

Margin* Turnover

11%*2.6

28.6

Part 2:

Margin

Net operating income/Sales

1058200(1+1.6)/9620000(1+4.2)

0.055

Turnover:

Sales/Average operating assets

9620000(1+4.2)/3700000

13.52

ROI:

0.055*13.52

74.36%

Part 3:

Margin

Net operating income/Sales

[1058200+610250]/[9620000+4000000]

1668450/13620000

0.1225

Turnover:

Sales/Average operating assets

13620000/[3700000+840000]

13620000/4540000

3

ROI:

36.8%

Part 1:

Margin

Net operating income/Sales

1058200/9620000

11%

Turnover:

Sales/Average operating assets

9620000/3700000

2.6

ROI:

Margin* Turnover

11%*2.6

28.6

Part 2:

Margin

Net operating income/Sales

1058200(1+1.6)/9620000(1+4.2)

0.055

Turnover:

Sales/Average operating assets

9620000(1+4.2)/3700000

13.52

ROI:

0.055*13.52

74.36%

Part 3:

Margin

Net operating income/Sales

[1058200+610250]/[9620000+4000000]

1668450/13620000

0.1225

Turnover:

Sales/Average operating assets

13620000/[3700000+840000]

13620000/4540000

3

ROI:

36.8%

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