Question
At the end of the fiscal year Zeta Tube performs an analysis comparing current year income statement to prior year income statement. The income statement
At the end of the fiscal year Zeta Tube performs an analysis comparing current year income statement to prior year income statement. The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year.
A. In dollars, calculate the operating income (loss) for each year.
B. Calculate the operating income (percentage) for each year.
C. Zeta Tube has decided to upgrade their equipment in the current year (the difference in total assets from prior year to current year). Calculate the return on investment for these purchases. Was the decision to invest in additional assets in the company successful? Explain.
(Amount in thousands) | Current Year | Prior Year | |
Sales | $ 33,750 | $ 24,750 | |
Cost of goods sold | $ 21,938 | $ 16,830 | |
Gross Profit | $ 11,812 | $ 7,920 | |
Wages | $ 8,775 | $ 6,188 | |
Utilities | $ 675 | $ 250 | |
Repairs | $ 169 | $ 325 | |
Selling | $ 506 | $ 200 | |
Total expenses | $ 10,125 | $ 6,963 | |
Operating income | |||
Operating income % | |||
Total assets (investment base) | $ 4,500 | $ 1,500 | |
Return on investment | |||
Residual income (8% cost of capital) |
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