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Omega Enterprises has different branches. The following financial statements belong to the branch named Omicron Branch. Omicron Branch Income Statement for the Year Ended December

Omega Enterprises has different branches. The following financial statements belong to the branch named "Omicron Branch."

Omicron Branch Income Statement for the Year Ended December 31, Year 20:

  • Sales Revenue: $750,000
  • Cost of Goods Sold: $450,000
  • Gross Margin: $300,000
  • Operating Expenses: $170,000
  • Depreciation Expense: $90,000
  • Operating Income: $40,000
  • Nonoperating Income: $70,000
  • Loss on Sale of Machinery: $50,000
  • Net Income: $60,000

Omicron Branch Balance Sheet as of December 31, Year 20:

  • Cash: $100,000
  • Accounts Receivable: $135,000
  • Inventory: $150,000
  • Machinery (less accumulated depreciation): $350,000
  • Total Assets: $735,000
  • Accounts Payable: $110,000
  • Notes Payable: $120,000
  • Stockholders' Equity: $505,000

Required:

  1. Calculate the ROI for Omicron Branch.
  2. Omega Enterprises has a desired ROI of 28%. Omicron Branch has an opportunity to invest $700,000 at an ROI of 30%. Calculate the new ROI if the investment is made.
  3. Determine the net profit margin for Omicron Branch.
  4. Compute the asset turnover ratio for Omicron Branch.
  5. Assess whether Omicron Branch met the company’s desired ROI after the new investment.

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