Nakamura Company provided the following income statement for the last year:

At the beginning of last year, the company had $24,200,000 in operating assets. At the end of the year, the company had $20,600,000 in operating assets.

Required:
1. Compute average operating assets.
2. Compute the margin and turnover ratios for last year. (Round the answer for margin ratio to two decimal places.)
3. Compute ROI. (Note: Round answer to two decimal places.)
4. Briefly explain the meaning of ROI.
5. Comment on why the ROI for Nakamura Company is relatively high (as compared to the lower ROI of a typical manufacturing company).

Transcribed Image Text:

Sales Less: Variable expenses Contribution margin Less: Fixed expenses Operating income $728,000,000 490,175,000 $237,825,000 128,625,000 $109,200,000