Consider the following condensed financial statements of Safe Money, Inc. The company€™s target rate of return is 20%.

Requirements
1. Calculate the company€™s ROI. Round all of your answers to four decimal places.
2. Calculate the company€™s profit margin ratio. Interpret your results.
3. Calculate the company€™s asset turnover ratio. Interpret your results.
4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results.
5. Calculate the company€™s RI. Interpret your results.

Transcribed Image Text:

SAFE MONEY, INC. Income Statement SAFE MONEY, INC. Comparative Balance Sheet As of December 31, 2016, and 2015 For the Year Ended December 31, 2016 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses: Interest Expense Income Before Income Tax Expense Income Tax Expense Net Income $ 9,000,000 2016 2015 5,200,000 3,800,000 Cash 3,350,000 Accounts Receivable Assets 73,000 61,000 26,800 1,200 304,000 211,000 110,000 s 590,000 410,000 58,200 1,800 450,000 Supplies (31,000) Property, Plant, and Equipment, net 419,000 Patents, net 146,650 Total Assets 272,350 153,000 Liabilities and Stockholders' Equity Accounts Payable Short-term Notes Payable Long-term Notes Payable Common Stock, no Par Retained Earnings Total Liabilities and Stockholders Equity $26,000 28,000 51,000 193,000 123,500 197,000 10,500 s590,000 410,000 145,000 205,000 21,000