Question

Provide the missing data in the following table for a distributor of martial arts products: (Round "Turnover" and "ROI" answers to 1 decimal place.)

Alpha Bravo Charlie

Sales ? $350,000 ?

Net Operating Income ? $35,000 $36,540

Average Operating Assets $473,000 ? ?

'Margin 5%   ? 9%

Turnover 5.0 ?   ?

Return on investment ? 25.0% 18%

Answer 1

For Alpha

Net operating income = ?

Sales = ?

Average operating assets = $473,000

Margin = 5%

Turnover = 5

Return on investment = ?

Return on investment = Margin x Turnover

= 5 x 5

= 25%

Return on investment = Net operating income/Average operating assets

25% = Net operating income/473,000

Net operating income = 473,000 x 25%

= $118,250

Margin = Net operating income/Sales

5% = 118,250/Sales

Sales = 118,250/5%

= $2,365,000

For Bravo

Net operating income = 35,000

Sales = $350,000

Average operating assets = ?

Margin = ?

Turnover = ?

Return on investment = 25%

Return on investment = Net operating income/Average operating assets

25% = 35,000/Average operating assets

Average operating assets = $140,000

Margin = Net operating income/Sales

= 35,000/350,000

= 10%

Turnover = Sales/Average operating assets

= 350,000/140,000

= 2.5

For charlie

Net operating income = 36,540

Sales = ?

Average operating assets = ?

Margin = 9%

Turnover = ?

Return on investment = 18%

Margin = Net operating income/Sales

9% = 36,540/Sales

Sales = $406,000

Return on investment = Net operating income/Average operating assets

18% = 36,540/Average operating assets

Average operating assets = 36,540/18%

= $203,000

Turnover = Sales/Average operating assets

= 406,000/203,000

= 2