Question

In: Accounting

Provide the missing data in the following table for a distributor of martial arts products: (Enter...

Provide the missing data in the following table for a distributor of martial arts products: (Enter "Turnover" and "ROI" answers to 1 decimal place.)

Division
Alpha Bravo Charlie
Sales $347,500
Net operating income $48,650 $60,580
Average operating assets $477,000
Margin 7 % % 13 %
Turnover 5.0
Return on investment (ROI)

ROI for B 35.0% and for C 26.0%

Solutions

Expert Solution

Calculation of missing figures of Alpha :

Turnover = Sales / Average operating assets

5 = Sales / $477,000

Sales = 5 * $477,000 = $2,385,000.

Margin = [ Net operating income / Sales ] * 100

7 = [ Net operating income / $2,385,000 ] * 100

Net operating income = 7 * $2,385,000 / 100

Net operating income = $166,950.

Return on Investment ( ROI ) = Turnover * Margin = 5 * 7% = 35%.

Calculation of missing figures of Bravo :

Margin = [ Net operating income / Sales ] * 100 = [ $48,650 / $347,500 ] * 100 = 14%.

ROI = Margin * Turnover

35% = 14% * Turnover

Turnover = 35% / 14% = 2.5

Turnover = Sales / Average operating assets

2.5 = $347,500 / Average operating assets

Average operating assets = $347,500 / 2.5 = $139,000.

Calculation of missing figures of Charlie :

Margin = [ Net operating income / Sales ] * 100

13 = [ $60,580 / Sales ] * 100

Sales = $60,580 * 100 / 13 = $466,000.

ROI = Margin * Turnover

26% = 13% * Turnover

Turnover = 26% / 13% = 2.

Turnover = Sales / Average operating assets

2 = $466,000 / Average operating assets

Average operating assets = $466,000 / 2 = $233,000.


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