11-41 on Investment, Margin, Turnover Heturn OB rod Elecronics is facing stiff competition from imported goods.Its hs been declining steadily for the past several years. The company has been forced to lower Ready operating income margin es so that it can maintain its market share. The operating results for the past 3 years are as pric ollows: Year 1 $10,000,000 1,200,000 15,000,000 Year 2 $ 9,500,000 1,045,000 15,000,000 Year 3 Sales Operating income Average assets $ 9,000,000 945,000 15,000,000 For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets ofthe company, which would remain inchanged without the JI'T system. She also estimates that sales and operating income will be Continued) restored to Year 1 levels because of simultaneous reductions in operating expenses and selline prices. Lower selling prices will llow Ready to expand its market share. (Note: Round ll num bers to two decimal places.) m- Required: l. Compute the ROI, margin, and turnover for Years 1, 2, and 3. 2. CONCEPTUAL CONNECTION Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover. Explain why the ROI increased over the Year 3 level. 3. CONCEPTUAL CONNECTION Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover. Explain why the ROI exceeded the Year 3 level. 4. CONCEPTUAL CONNECTION Assume that all expectations for Year 4 were realized. Compute the expected ROL, margin, and turnover. Explain why the ROI increased over the Year 3 level