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

1. Compute Bensons profit margin for 2018.

2. Compute Bensons turnover for 2018.

3. Compute Bensons return on investment for 2018.

4. 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.