In: Accounting
Margin, Turnover, Return on Investment, Average Operating Assets
Elway Company provided the following income statement for the last year:
Sales | $749,320,000 |
Less: Variable expenses | 551,128,000 |
Contribution margin | $198,192,000 |
Less: Fixed expenses | 198,192,000 |
Operating income | $0 |
At the beginning of last year, Elway had $38,624,000 in operating assets. At the end of the year, Elway had $41,390,000 in operating assets.
Required:
1. Compute average operating assets.
$
2. Compute the margin (as a percent) and turnover ratios for last year. If required, round your answers to two decimal places.
Margin | % |
Turnover |
3. Compute ROI as a percent. Use the part 2
final answers in these calculations and round the final answer to
two decimal places.
%
4. ROI measures a company’s ability to generate income relative to its investment in assets. The greater the ROI, the more efficiently the company is generating from its assets.
5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
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