1. Thornton Corporations balance sheet indicates that the company has $660,000 invested in operating assets. During 2018, Thornton earned operating income of $87,120 on $1,320,000 of sales.

Required

a. Compute Thorntons profit margin for 2018.

Compute Thorntons turnover for 2018.

Compute Thorntons return on investment for 2018.

b. Recompute Thorntons ROI under each of the following independent assumptions: Sales increase from $1,320,000 to $1,584,000, thereby resulting in an increase in operating income from $87,120 to $95,040. Sales remain constant, but Thornton reduces expenses, resulting in an increase in operating income from $87,120 to $89,760. Thornton is able to reduce its invested capital from $660,000 to $528,000 without affecting operating income.

Profit margin		%
Turnover		times
Return on investment		%

Return on Investment
(1)		%
(2)		%
(3)		%