Question

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%

Answer 1

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.