Consider the following condensed financial statements of Money Safe, Inc. The company's target rate of return is 40%: (Click the icon to view the comparative balance sheet.) B (Click the icon to view the income statement.) Read the requirements. Requirement 1. Calculate the company's ROI. Round all of your answers to four decimal places. Begin by selecting the formula to calculate return on investment (ROI), and then enter the amounts to calculate the company's ROI. (Round your calculations to four decimal places and enter your final to the nearest hundredth of a percent, X.XX%) Operating income Average total assets = ROI 350000 500,000 70 % Requirement 2. Calculate the company's profit margin ratio. Interpret your results. Begin by selecting the formula to calculate profit margin ratio, and then enter the amounts to calculate the company's profit margin ratio. (Enter your final to the nearest hundredth of a percent, X.XX%) Operating income Net sales revenue = Profit margin ratio 350,000 1 7 ,000,000 5 % 0.05 of operating income for every dollar of The company's profit margin ratio tells us that they earn $ net sales revenue Requirement 3. Calculate the company's asset turnover ratio. Interpret your results. Begin by selecting the formula to calculate asset turnover ratio, and then enter the amounts to calculate the company's asset turnover ratio. Net sales revenue Average total assets = Asset turnover ratio 7.000.000 500,000 = 14 The company's asset turnover ratio explains how efficiently a company uses its . The company is generating $ L of to generate with every $1.00 of Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. First, select the expanded ROI formula. Profit margin ratio x Asset turnover ratio = ROI Using the expanded formula, the ROI for Money Safe, Inc. is 70%. with the ROI calculated in To determine what is driving a company's ROI, management often restates the ROI equation in its expanded form. The ROI calculated with the expanded formula agrees Requirement 1. Requirement 5. Calculate the company's RI. Interpret your results. First, select the formula to calculate residual income (RI). Operating income ( Average total assets x Target rate of retur ) = RI The RI for Money Safe, Inc. is $ 150,000 Money Safe, Inc. is management's target rate of return. Money Safe, Inc. is management's target rate of return. exceeding not meeting The company's asset turnover ratio explains how efficiently a company uses its 1. The company is generating $ to generate with every $1.00 of after-tax operating income Requirement 4. Use the expanded ROI formula to confirm your results from Requil average total assets First, select the expanded ROI formula. current liabilities net income Profit margin ratio n Asset turnover ratio 1 = ROI net sales revenue Using the expanded formula, the ROI for Money Safe, Inc. is 70 %. operating income 0 Data Table Money Safe, Inc. Income Statement For the Year Ended December 31, 2018 Net Sales Revenue $ 7,000,000 Cost of Goods Sold 4,200,000 Gross Profit 2,800,000 Operating Expenses 2,450,000 Operating Income 350,000 Other Income and (Expenses): Interest Expense (33,000) Income Before Income Tax Expense 317,000 Income Tax Expense 110,950 Net Income $ 206,050 Data Table Money Safe, Inc. Comparative Balance Sheet As of December 31, 2018 and 2017 2018 2017 Assets Cash $ 75,000 $ 63,000 Accounts Receivable 60,200 28,800 Supplies 1,800 1,200 Property, Plant, and Equipment, net 298,000 207,000 Patents, net 157,000 108,000 Total Assets $ 592,000 $ 408,000 Liabilities and Stockholders' Equity Accounts Payable $ 28,000 $ 30,000 Short-term Notes Payable 147,000 53,000 Long-term Notes Payable 195,000 125,500 Common Stock, no Par 199,000 187,000 Retained Earnings 23,000 12,500 Total Liabilities and $ 592,000 $ 408,000 Stockholders' Equity