(Financial statementanalysis)The annual sales forSalco, Inc. were $4.52 million last year. Thefirm's end-of-year balance sheet was asfollows: Salco's income statement for the year was asfollows:

a. CalculateSalco's total assetturnover, operating profitmargin, and operating return on assets.

b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $1.02 million. The firm will maintain its present debt ratio of 50 percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.3 percent. What will be the new operating return on assets ratio(i.e., net operating incomedivided bytotal assets) for Salco after theplant's renovation?

c.Given that the plant renovation in part (b) occurs andSalco's interest expense rises by $45,000 peryear, what will be the return earned on the commonstockholders' investment? Compare this rate of return with that earned before the renovation. Based on thiscomparison, did the renovation have a favorable effect on the profitability of thefirm?