Question

ROI: Fill in the Unknowns

Provide the missing data in the following situations:

	Eastern Division	Western Division	Southern Division
Sales	Answer	$6,000,000	Answer
Net operating income	$180,000	$ 360,000	$120,000
Operating assets	Answer	Answer	$600,000
Return on investment	25%	18%	Answer %
Return on sales	0.05	Answer	0.08
Investment turnover	Answer	Answer	2.5

Answer 1

ANSWER:

​​​​​​According to the given information below is the solution:

I.EASTERN DIVISION

Calculation of Sales:

Sales=Net operating Income/Return on sales.

=$ 1,80,000/0.05 = $ 36,00,000.

  Calculation of Operating Assets:

Operating Assets=

Net operating income/Return on Investment.

=$ 1,80,000/0.25= $ 7,20,000.

Calculation of Investment Turnover:

Investment turnover= Sales/Operating Assets.

=$3,60,000/$ 7,20,000= 5.

Sales= $ 36,00,000.

Operating Assets=$7,20,000.

Investment Turnover= 5.

II. WESTERN DIVISION

   Calculation of Operating Assets

Operating Assets=

Net operating income/Return on Investment.

=$ 3,60,000/0.18= $20,00,000.

Calculation of Return on sales:

Return on Sales= Net operating income/sales.

=$3,60,000/ $ 60,00,000 = 0.06.

Calculation of Investment Turnover:

Investment Turnover= Sales/Operating Assets.

= $60,00,000/$ 20,00,000 = 3.

Operating Assets=$20,00,000.

Return on Sales= 0.06.

Investment Turnover= 3.

III.SOUTHERN DIVISION

Calculation of Sales.

Sales= Net operating income/Return on sales.

=$1,20,000/0.08= $ 15,00,000.

Calculation of Return on Investment.

​​​​​​Return on investment=(Net operating income/ Operating Assets)X100.

= ($ 1,20,000/$ 6,00,000) X 100= 20%.

Sales=$ 15,00,000.

Return on investment=20%.

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