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Optimus Enterprises operates various branches. The following financial statements belong to the branch named Eta Branch. Eta Branch Income Statement for the Year Ended December

Optimus Enterprises operates various branches. The following financial statements belong to the branch named "Eta Branch."

Eta Branch Income Statement for the Year Ended December 31, Year 16:

  • Sales Revenue: $550,000
  • Cost of Goods Sold: $330,000
  • Gross Margin: $220,000
  • Operating Expenses: $110,000
  • Depreciation Expense: $55,000
  • Operating Income: $55,000
  • Nonoperating Income: $45,000
  • Loss on Sale of Machinery: $25,000
  • Net Income: $75,000

Eta Branch Balance Sheet as of December 31, Year 16:

  • Cash: $70,000
  • Accounts Receivable: $95,000
  • Inventory: $110,000
  • Machinery (less accumulated depreciation): $180,000
  • Total Assets: $455,000
  • Accounts Payable: $70,000
  • Notes Payable: $80,000
  • Stockholders' Equity: $305,000

Required:

  1. Calculate the ROI for Eta Branch.
  2. Optimus Enterprises has a desired ROI of 23%. Eta Branch has an opportunity to invest $350,000 at an ROI of 25%. Calculate the new ROI if the investment is made.
  3. Determine the net profit margin for Eta Branch.
  4. Compute the asset turnover ratio for Eta Branch.
  5. Assess whether Eta Branch met the company’s desired ROI after the new investment.

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