Management forecasts that collections from credit customers will be $11,600 in October and $14,200 in November. The store is scheduled to receive $6,500 cash on a business note receivable in October. Projected cash payments include inventory purchases ($13,700 in October and $13,400 in November) and operating expenses ($3,500 each month). Family Power's bank requires a $10,500 minimum balance in the store's chequing account. At the end of any month when the account balance dips below $10,500, the bank automatically extends credit to the store in multiples of $1,000. Family Power borrows as little as possible and pays back loans in quarterly instalments of $1,000 plus 5% interest on the entire unpaid principal. The first payment occurs three months after the loan. Requirement 1. Calculate each division's ROI. First, enter the formula, and then calculate each division's ROI using the expanded formula. (Enter your answers as a percent, rounded to four decimal places.) II = ROI Residential % Professional = % Interpret your results. Each division's ROI is ; however, the has an even higher ROI than the Requirement 2. Calculate each division's profit margin. Interpret your results. First, enter the formula, and then calculate each division's profit margin. (Enter your answers as a percent, rounded to four decimal places.) Profit margin Residential % Professional % Interpret your results. The Professional Division is earning about von each dollar of sales, whereas the Residential Division is only earning about on each dollar of sales. The higher profit margin helps to account for its higher ROI. Denomen nolauleteseb discicielt til terrat Auto Requirement 3. Calculate each division's asset turnover. Interpret your results. First, enter the formula, and then calculate each division's asset turnover. (Round your answers to two decimal places.) Asset turnover Residential = times Professional = times Interpret your results. The Professional Division is generating about of sales for every dollar of assets. The Residential Division is generating about of sales for each dollar of assets invested. The is more efficient. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude? First, enter the expanded formula, and then calculate each division's ROI using the expanded formula. (Round your final answers to four decimal places. Enter the answer as a percent.) X ROI Residential % % Professional % % Confirm your results from Requirement 1. Does your answer for the residential ROI agree with the basic ROI? V Does your answer for the professional ROI agree with the basic ROI? What can you conclude? Even though the efficiency (as measured by the asset turnover) is higher than that of the the v profitability (as measured by the profit margin) is so much higher that it causes its ROI to be much higher than the Management forecasts that collections from credit customers will be $11,600 in October and $14,200 in November. The store is scheduled to receive $6,500 cash on a business note receivable in October. Projected cash payments include inventory purchases ($13,700 in October and $13,400 in November) and operating expenses ($3,500 each month). Family Power's bank requires a $10,500 minimum balance in the store's chequing account. At the end of any month when the account balance dips below $10,500, the bank automatically extends credit to the store in multiples of $1,000. Family Power borrows as little as possible and pays back loans in quarterly instalments of $1,000 plus 5% interest on the entire unpaid principal. The first payment occurs three months after the loan. Requirement 1. Calculate each division's ROI. First, enter the formula, and then calculate each division's ROI using the expanded formula. (Enter your answers as a percent, rounded to four decimal places.) II = ROI Residential % Professional = % Interpret your results. Each division's ROI is ; however, the has an even higher ROI than the Requirement 2. Calculate each division's profit margin. Interpret your results. First, enter the formula, and then calculate each division's profit margin. (Enter your answers as a percent, rounded to four decimal places.) Profit margin Residential % Professional % Interpret your results. The Professional Division is earning about von each dollar of sales, whereas the Residential Division is only earning about on each dollar of sales. The higher profit margin helps to account for its higher ROI. Denomen nolauleteseb discicielt til terrat Auto Requirement 3. Calculate each division's asset turnover. Interpret your results. First, enter the formula, and then calculate each division's asset turnover. (Round your answers to two decimal places.) Asset turnover Residential = times Professional = times Interpret your results. The Professional Division is generating about of sales for every dollar of assets. The Residential Division is generating about of sales for each dollar of assets invested. The is more efficient. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude? First, enter the expanded formula, and then calculate each division's ROI using the expanded formula. (Round your final answers to four decimal places. Enter the answer as a percent.) X ROI Residential % % Professional % % Confirm your results from Requirement 1. Does your answer for the residential ROI agree with the basic ROI? V Does your answer for the professional ROI agree with the basic ROI? What can you conclude? Even though the efficiency (as measured by the asset turnover) is higher than that of the the v profitability (as measured by the profit margin) is so much higher that it causes its ROI to be much higher than the
