Question
[ 7 Marks ] The following data have been extracted from the year-end reports of two companies: Company X and Company Y: Company X Company
[7 Marks] The following data have been extracted from the year-end reports of two companies: Company X and Company Y:
Company X | Company Y | |
Sales | $800,000 | D ? |
Operating income | $56,000 | E ? |
Average operating assets | A ? | $125,000 |
Margin | B %? | 4% |
Turnover | C ? | 6 |
Return on investment | 14% | F %? |
Required:
a) [6 Marks] Fill in the missing data in the above table. Calculations are not required and they will NOT BE MARKED. Also, the answershould be a whole number;there should NOT be a decimal point in the answer. Make sure that you properly label your answer as in the like manner (e.g., Company X, A = xxx)
b) [1 Marks] Suppose that John's performance is measured based on ROI. Suppose also that the company that John works for requires an ROI on all investments of at least 15%. If John currently has an ROI of 20%, and an investment opportunity arises in his department that has an ROI of 18%, why might he not invest in this opportunity? Explain in one sentence.
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