Question
Franklin Corporations balance sheet indicates that the company has $570,000 invested in operating assets. During 2018, Franklin earned operating income of $64,980 on $1,140,000 of
Franklin Corporations balance sheet indicates that the company has $570,000 invested in operating assets. During 2018, Franklin earned operating income of $64,980 on $1,140,000 of sales.
Required Compute Franklins profit margin for 2018. Compute Franklins turnover for 2018. Compute Franklins return on investment for 2018. Recompute Franklins ROI under each of the following independent assumptions: (1) Sales increase from $1,140,000 to $1,368,000, thereby resulting in an increase in operating income from $64,980 to $82,080. (2) Sales remain constant, but Franklin reduces expenses, resulting in an increase in operating income from $64,980 to $67,260. (3) Franklin is able to reduce its invested capital from $570,000 to $456,000 without affecting operating income.
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