Profitability Measures In 2002, Cidad Corporation reported net income of $600,000 on total sales of

$4,800,000. Total assets were $3,000,000 at January 1, 2002, and $3,300,000 at December 31, 2002. Cidad is considering purchasing $1,700,000 of additional assets. With the additional investment, Cidad estimates its asset turnover rate will increase to 1.6 and the return on assets will be 23.1 percent.

a. Compute the return on assets earned by Cidad Corporation for 2002.

b. Compute the (1) margin on the sales and (2) asset tufnover ratio for 2002.

c. If Cidad had purchased the new assets on January 1, 2002, how much would sales and net income have increased?

d. Should Cidad expand? Explain your answer.