In: Accounting
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.
Required:
Help Krall rebuild its information database by completing the
following table: (Do not round your intermediate
calculations. Round your final answers to 2 decimal places, (i.e.
0.1234 should be entered as 12.34%.).)
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Answer:
Return on Investment = (Operating Income / Average invested assets) * 100
Profit Margin = (Operating Income / Sales revenue) * 100
Investment Turnover = (Sales revenue / Average invested assets)
So,
1.
Return on Investment = (Operating Income / Average invested assets) * 100
= ($48,000 / $1,540,000) * 100
= 3.11%
Profit Margin = (Operating Income / Sales revenue) * 100
= ($48,000 / $701,000) * 100
= 6.85%
Investment Turnover = (Sales revenue / Average invested assets)
= $701,000 / $1,540,000
= 0.45
2.
Return on Investment = (Operating Income / Average invested assets) * 100
= ($87,745.5 / $2,550,000) * 100
= 3.44%
Profit Margin = (Operating Income / Sales revenue) * 100
0.093 = $87,745.5 / Sales revenue
Sales revenue = $87,745.5 / 0.093
= $943,500
3.
Profit Margin = (Operating Income / Sales revenue) * 100
0.157 = Operating Income / $1,980,000
Operating income = $1,980,000 * 0.157
= $310,860
Investment Turnover = Sales revenue / Average invested assets
1.2 = $1,980,000 / Average invested assets
Average invested assets = $1,980,000 / 1.2
= $1,650,000
Return on Investment = (Operating Income / Average invested assets) * 100
= ($310,860 / $1,650,000) * 100
= 18.84%
4.
Investment Turnover = Sales revenue / Average invested assets
2.1 = $516,000 / Average invested assets
Average invested assets = $516,000 / 2.1
= $245,714
Return on Investment = (Operating Income / Average invested assets) * 100
0.123 = Operating Income / $245,714
Operating Income = $245,714 * 0.123
= $30,223
Profit Margin = (Operating Income / Sales revenue) * 100
= ($30,223 / $516,000) * 100
= 5.85%