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9. Consider the following condensed financial statements of Forever Free, Inc. The company's target rate of return is 40%; (Click the icon to view the comparative balance sheet.) 2(Click the icon to view the income statement.) Read the requirements Requirement 1. Calculate the company's ROl. Round all of your answers to four decimal places. Begin by selecting the formula to calculate return on investment (ROI), and then enter the amounts to calculate the company's ROl. (Round your calculations to four decimal places and enter your final to the nearest hundredth of a percent, X.XX%) Operating income Average total assets ROI 350,000 500,000 70% Requirement 2. Calculate the company's profit margin ratio. Interpret your results. Begin by selecting the formula to calculate profit margin ratio, and then enter the amounts to calculate the company's profit margin ratio. (Enter your final to the nearest hundredth of a percent, Operating income Net sales revenue Profit margin ratio 350,000 3,500,000 10 % The company's profit margin ratio tells us that they earn S 0.10 ofoperating income for every dollar of net sales revenue Requirement 3. Calculate the company's asset turnover ratio. Interpret your results. Begin by selecting the formula to calculate asset turnover ratio, and then enter the amounts to calculate the company's asset turnover ratio. Net sales revenue Average total assets Asset turnover ratio 3,500,000 500,000 The company's asset tumover ratio explains how efficiently a company uses its average total assets to generate with every $1.00 of net sales revenue average total assets Requirement 4. Use the expanded ROl formula to confirm your results from Requirement 1. Interpret your results. First, select the expanded ROl formula. The company is generating$7 of net sales revenue Profit margin ratio Asset turnover ratio ROI Using the expanded formula, the ROl for Forever Free, Inc. is 70 %. To determine what is driving a company's ROI, management often restates the ROl equation in its expanded form. The ROl calculated with the expanded forrmula agrees with the ROI calculated in Requirement 1 Requirement 5. Calculate the company's RI. Interpret your results. First, select the formula to calculate residual income (RI). Operating income ( Average total assets x Target rate of retum )= RI The RI for Forever Free, Inc. is $ 150,000 Forever Free, Inc. is exceeding management's target rate of return. Forever Free, Inc. Comparative Balance Sheet As of December 31, 2018 and 2017 2018 2017 Assets Cash Accounts Recaivable Supplies Property, Plant, and Equipment, net Patents, net Total Assets S 64,000 S 52,000 17,800 400 331,800 229.800 135,000 119,000 S 581,000 S 419,000 49,200 1,000 Liabilities and Stockholders' Equity Accounts Payable Short-term Notes Payable Long-term Notes Payable Common Stock, no Par Retained Earnings Total Liabilities and Stockholders' Eqt S 17,000 $ 19,000 42.000 184,000 114,500 232,000 242,000 1,500 S 581,000 419,000 136,000 12,000 2: Data Table Forever Free, Inc. Income Statement For the Year Ended December 31, 2018 Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Income and (Expenses) $ 3,500,000 2,200,000 1,300,000 950.000 350,000 Interest Expense Income Before Income Tax Expense Income Tax Expense Net Income (27,000) 323,000 113.050 209,950