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Kaler Company has sales of $1,430,000, cost of goods sold of $790,000, other operating expenses of $203,000, average invested assets of $4,500,000, and a
Kaler Company has sales of $1,430,000, cost of goods sold of $790,000, other operating expenses of $203,000, average invested assets of $4,500,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold increase by 10 percent. b. Operating expenses increase by $84,000. c. Operating expenses decrease by 20 percent. d. Average invested assets decrease by $395,000. e. Kaler changes its hurdle rate to 9 percent. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Req 2E Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) Operating expenses increase by $84,000. Note: Enter your ROI percentage answer to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amount should be indicated with a minus sign. Return on Investment 11.57 % Residual Income (Loss) $ (19,000) Show less Kaler Company has sales of $1,430,000, cost of goods sold of $790,000, other operating expenses of $203,000, average invested assets of $4,500,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold increase by 10 percent. b. Operating expenses increase by $84,000. c. Operating expenses decrease by 20 percent. d. Average invested assets decrease by $395,000. e. Kaler changes its hurdle rate to 9 percent. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Req 2E Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario's impact on Kaler's ROI and residual income. (Note: Treat each scenario independently.) Operating expenses decrease by 20 percent. Note: Enter your ROI percentage answer to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amount should be indicated with a minus sign. Return on Investment 8.80% Residual Income (Loss) $ 143,600 Show less
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