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(Evaluating current and pro forma profitability) The annual sales for Salco Inc. were $4.49 million last year. All sales are on credit. The firm's end-of-year
(Evaluating current and pro forma profitability) The annual sales for Salco Inc. were $4.49 million last year. All sales are on credit. The firm's end-of-year balance sheet and income statement were in the popup window. a. Calculate Salco's total asset turnover, operating profit margin, and operating return on assets. b. Salco plans to renovate one of its plants, which will require an added investment in plant and equipment of $1.06 million. The firm will maintain its present debt ratio of 0.540 when financing the new investment and expects sales to rematnt. The operating profit margin will rise to 13.8 percent. What will be the new operating return on assets for Salco after the plant's renovation? c. Given that the plant renovation in part b occurs and Salco's interest expense rises by $54,000 per year, what will be the return earned on the common stockholders investment? Compare this rate of return with that earned before the renovation. a. Calculate Salco's total asset turnover, operating profit margin, and operating return on assets. The total asset turnover is x (Round to two decimal places)
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