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1. The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. RUSH DELIVERY COMPANY Income Statement Comparison

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1. The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. RUSH DELIVERY COMPANY Income Statement Comparison Current Year Prior Year (Amounts in thousands) 325 Sales $15,000 $11,000 Cost of goods sold 9,750 7,480 Gross profit $5,250 $3,520 Wages $3,900 $3,080 Utilities 300 250 Repairs Selling 200 Total expenses $4,500 $3,855 Operating income/loss) Operating income/(loss) % Total assets (investment base) $4,500 $1,500 Return on investment Residual income (8% cost of capital) A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROL Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C

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