Question
CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: Sales $ 4,300,000 Net operating income $ 301,000 Average
CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales | $ 4,300,000 |
---|---|
Net operating income | $ 301,000 |
Average operating assets | $ 860,000 |
The following questions are to be considered independently.
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 40% and that net operating income will increase by 180%, with no increase in average operating assets. What would be the companys ROI?
3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,550,000 increase in sales, requiring a $310,000 increase in average operating assets, with a resulting $444,875 increase in net operating income. What would be the companys ROI in this scenario?
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