Question
Posters.com is a small Internet retailer of highquality posters. The company has $710,000 in operating assets and fixed expenses of $153,000 per year. With this
Posters.com is a small Internet retailer of highquality posters. The company has $710,000 in operating assets and fixed expenses of $153,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,100,000 per year. The companys contribution margin ratio is 11%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 11 cents.
Required:
Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
Sales | Net Operating | Average Operating | ROI | |
| Income | Assets | % | |
$ 4,600,000 | $ 353,000 | $ 710,000 |
| % |
$ 4,700,000 |
| $ 710,000 |
| % |
$ 4,800,000 |
| $ 710,000 |
| % |
$ 4,900,000 |
| $ 710,000 |
| % |
$ 5,000,000 |
| $ 710,000 |
| % |
$ 5,100,000 |
| $ 710,000 |
| % |
What happens to the companys return on investment (ROI) as sales increase?
Increases
Decreases
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