Exercise 9-13 Effects of Changes in Sales, Expenses, and Assets on ROI [LO9-1]

[The following information applies to the questions displayed below.]

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Sales	$	18,800,000
Net operating income	$	1,428,800
Average operating assets	$	4,700,000

References

Section BreakExercise 9-13 Effects of Changes in Sales, Expenses, and Assets on ROI [LO9-1]

3.

value: 5.55 points

Required information

Exercise 9-13 Part 1

Required:

1.

Compute the company's margin, turnover and return on investment (ROI). (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

2.

The entrepreneur who founded the company is convinced that sales will increase next year by 160% and that net operating income will increase by 420%, with no increase in average operating assets. What would be the companys ROI? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

3.

The Chief Financial Officer of the company believes a more realistic scenario would be a $5,000,000 increase in sales, requiring a $2,100,000 increase in average operating assets, with a resulting $879,800 increase in net operating income. What would be the companys ROI in this scenario? (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)