Question
Problem 15-22 Return on investment LO 15-6 Benson Corporations balance sheet indicates that the company has $530,000 invested in operating assets. During 2018, Benson earned
Problem 15-22 Return on investment LO 15-6
Benson Corporations balance sheet indicates that the company has $530,000 invested in operating assets. During 2018, Benson earned operating income of $56,180 on $1,060,000 of sales.
Required
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Compute Bensons profit margin for 2018.
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Compute Bensons turnover for 2018.
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Compute Bensons return on investment for 2018.
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Recompute Bensons ROI under each of the following independent assumptions: (1) Sales increase from $1,060,000 to $1,272,000, thereby resulting in an increase in operating income from $56,180 to $69,960. (2) Sales remain constant, but Benson reduces expenses, resulting in an increase in operating income from $56,180 to $58,300. (3) Benson is able to reduce its invested capital from $530,000 to $424,000 without affecting operating income.
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