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Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of $208,000, average invested assets of $4,600,000, and a hurdle
Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of $208,000, average invested assets of $4,600,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler's return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROl and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Return on Investment Investment Tumover Profit Margin Residual Income (Loss) 2. 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.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.)) a. Company sales and cost of goods sold increase by 15 percent Return on Investment Residual Income (Loss) b. Operating expenses increase by $85,000. Return on Investment Residual Income (Loss)
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