Kaler Company has sales of $1,450,000, cost of goods sold of
$795,000, other operating expenses of $208,000, average invested
assets of $4,600,000, and a hurdle rate of 12 percent.
Required:
1. Determine Kaler’s return on investment (ROI),
investment turnover, profit margin, and residual income.
2. Several possible changes that Kaler could face
in the upcoming year follow. Determine each scenario’s impact on
Kaler’s ROI and residual income. (Note: Treat each scenario
independently.)
a. Company sales and cost of goods sold increase
by 15 percent.
b. Operating expenses increase by $85,000.
c. Operating expenses decrease by 10
percent.
d. Average invested assets decrease by
$405,000.
e. Kaler changes its hurdle rate to 9 percent.
Determine Kaler’s return on investment (ROI), investment
turnover, profit margin, and residual income. (Do not round your
intermediate calculations. Enter your ROI and Profit Margin answers
to 2 decimal places (i.e., 0.1234 should be entered as 12.34%).
Round your Investment Turnover answer to 4 decimal places.)
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Return on Investment |
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% |
Investment Turnover |
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Profit Margin |
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% |
Residual Income (Loss) |
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Req 2a
Several possible changes that Kaler could face in the upcoming
year follow. Determine each scenario’s impact on Kaler’s ROI and
residual income. (Note: Treat each scenario independently.) Company
sales and cost of goods sold increase by 15 percent. (Enter your
ROI percentage answer to 2 decimal places, (i.e., 0.1234 should be
entered as 12.34%.))
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Return on Investment |
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% |
Residual Income (Loss) |
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Several possible changes that Kaler could face in the upcoming
year follow. Determine each scenario’s impact on Kaler’s ROI and
residual income. (Note: Treat each scenario independently.)
Operating expenses increase by $85,000. (Enter your ROI percentage
answer to 2 decimal places, (i.e., 0.1234 should be entered as
12.34%.))
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Return on Investment |
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% |
Residual Income (Loss) |
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Several possible changes that Kaler could face in the upcoming
year follow. Determine each scenario’s impact on Kaler’s ROI and
residual income. (Note: Treat each scenario independently.)
Operating expenses decrease by 10 percent. (Enter your ROI
percentage answer to 2 decimal places, (i.e., 0.1234 should be
entered as 12.34%.))
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Return on Investment |
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% |
Residual Income (Loss) |
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Req 2D
Several possible changes that Kaler could face in the upcoming
year follow. Determine each scenario’s impact on Kaler’s ROI and
residual income. (Note: Treat each scenario independently.) Average
invested assets decrease by $405,000. (Enter your ROI percentage
answer to 2 decimal places, (i.e., 0.1234 should be entered as
12.34%.))
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Return on Investment |
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% |
Residual Income (Loss) |
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Several possible changes that Kaler could face in the upcoming
year follow. Determine each scenario’s impact on Kaler’s ROI and
residual income. (Note: Treat each scenario independently.) Kaler
changes its hurdle rate to 9 percent. (Enter your ROI percentage
answer to 2 decimal places, (i.e., 0.1234 should be entered as
12.34%.))
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|
|
Return on Investment |
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% |
Residual Income (Loss) |
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