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2 What happens to the company EXERCISE 11-6 Effects of Changes in Sales, Expenses, and Assets on ROI [LO1] BusServ.com Corporation provides business-to-business services
2 What happens to the company EXERCISE 11-6 Effects of Changes in Sales, Expenses, and Assets on ROI [LO1] BusServ.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: Sales.. Net operating income $8,000,000 $800,000 Required: Average operating assets. $3,200,000 Consider each question below independently. Carry out all computations to two decimal places. 1. Compute the company's return on investment (ROI). 2 The entrepreneur who founded the company is convinced that sales will increase next year by 150% and that net operating income will increase by 400%, with no increase in average operating assets. What would be the company's ROI? 3. The Chief Financial Officer of the company believes a more realistic scenario would be a $2 million increase in sales, requiring an $800,000 increase in average operating assets. with a resulting $250,000 increase in net operating income. What would be the company's ROI in this scenario? 11011021
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To solve this problem well use the Return on Investment ROI formula textROI fracNet Operating IncomeAverage Operating Assets Given data Sales 8000000 Net Operating Income ...Get Instant Access to Expert-Tailored Solutions
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