Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Adams Corporation's balance sheet indicates that the company has $510,000 invested in operating assets. During the year, Adams earned operating income of $52,020 on $1,020,000

Adams Corporation's balance sheet indicates that the company has $510,000 invested in operating assets. During the year, Adams earned operating income of $52,020 on $1,020,000 of sales. Required a. Compute Adams's profit margin for the year. b. Compute Adams's turnover for the year. c. Compute Adams's return on investment for the year. d. Recompute Adams's ROI under each of the following independent assumptions: (1) Sale increase from $1,020,000 to $1,224,000, thereby resulting in an increase in operating income from $52,020 to $55,080. (2) Sales remain constant, but Adams reduces expenses, resulting in an increase in operating income from $52,020 to $54,060. (3) Adams is able to reduce its invested capital from $510,000 to $408,000 without affecting operating income. Complete this question by entering your answers in the tabs below. Req A to C Req Di Compute Adams's profit margin, turnover and return on investment for the year. (Round "Profit margin" and "Return on investment" to 1 decimal place (l.e., 0.234 should be entered as 23.4).) a. Profit margin (3) Adams is apie to reduce its invested capital from 10 48,000 without arrecting operaung income. Complete this question by entering your answers in the tabs below. Req A to C Req D Compute Adams's profit margin, turnover and return on investment for the year. (Round "Profit margin" and "Return on investment" to 1 decimal place (i.e., 0.234 should be entered as 23.4).) a. Profit margin % b. Turnover times c. Return on investment % Req A to C Req D Check Complete this question by entering your answers in the tabs below. Req A to C Req D Recompute Adams's ROI under each of the following independent assumptions: (Do not round intermediate calculations. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) (1) Sales increase from $1,020,000 to $1,224,000, thereby resulting in an increase in operating income from $52,020 to $55,080. (2) Sales remain constant, but Adams reduces expenses, resulting in an increase in operating income from $52,020 to $54,060. (3) Adams is able to reduce its invested capital from $510,000 to $408,000 without affecting operating income. Return on Investment (1) % (2) % (3) %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Financial And Managerial Accounting

Authors: Janice E. Lawrence

11th Edition

0759321094, 978-0759321090

More Books

Students also viewed these Accounting questions