Question

In: Accounting

Krall Company recently had a computer malfunction and lost a portion of its accounting records. The...

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%.).)

Return on Investment Profit Margin Investment Turnover Operating Income Sales Revenue Average Invested Assets
% % $48,000.00 $701,000.00 $1,540,000.00
% 9.30 % 0.37 $87,745.50 $2,550,000.00
% 15.70 % 1.20 $1,980,000.00
12.30 % % 2.10 $516,000.00

Solutions

Expert Solution

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%

ekkarill92 answered 2 years ago
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