The Millard Division's operating data for the past two years are provided below: Year 1 Year...

The Millard Division's operating data for the past two years are provided below:

	Year 1			Year 2
Return on investment		10	%		24	%
Net operating income		?		$	380,000
Turnover		?			4
Margin		?			?
Sales	$	3,210,000			?

Millard Division's margin in Year 2 was 120% of the margin in Year 1.

The net operating income for Year 1 was:

Garrison 16e Rechecks 2017-10-31

Multiple Choice

$385,200
$160,500
$192,600
$190,000

Last year a company had sales of $370,000, a turnover of 2.1, and a return on investment of 56.7%. The company's net operating income for the year was:

Multiple Choice

$109,890
$209,790
$176,190
$99,900

Expert Solution

1)	Year 2
	ROI = Net Income / Average Assets

	24 % = $380000/ Average Assets

	Average Assets =1583333

	Asset Turnover Ratio = Sales / Average Assets

	4 = Sales /1583333
	Sales =$63,33,333

	Margin = net operating income / sales
	=$380000/6333333

	6.00%

	Therefore margin for year 1 would be =6/120*100

	=5%

	Year 1

	Margin = net operating income / sales

	5% = net operating income/ 3210000

	=$160500

	Correct Option: SECOND


2)	margin = return on investment / turnover

	=56.7/2.1

	=27%	27

	Operating income = $370000*27%

	=$99900

	Correct Option: LAST

ekkarill92 answered 2 years ago

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