Question
Adams Corporations balance sheet indicates that the company has $510,000 invested in operating assets. During 2018, Adams earned operating income of $52,020 on $1,020,000 of
Adams Corporations balance sheet indicates that the company has $510,000 invested in operating assets. During 2018, Adams earned operating income of $52,020 on $1,020,000 of sales.
Required
Adams Corporations balance sheet indicates that the company has $510,000 invested in operating assets. During 2018, Adams earned operating income of $52,020 on $1,020,000 of sales.
Required
Compute Adamss profit margin for 2018.
Compute Adamss turnover for 2018.
Compute Adamss return on investment for 2018.
Recompute Adamss ROI under each of the following independent assumptions: (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.
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