Question
Problem 15-22A (Algo) Return on investment LO 15-6 Campbell Corporations balance sheet indicates that the company has $540,000 invested in operating assets. During the year,
Problem 15-22A (Algo) Return on investment LO 15-6
Campbell Corporations balance sheet indicates that the company has $540,000 invested in operating assets. During the year, Campbell earned operating income of $58,320 on $1,080,000 of sales.
Required
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Compute Campbells profit margin for the year.
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Compute Campbells turnover for the year.
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Compute Campbells return on investment for the year.
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Recompute Campbells ROI under each of the following independent assumptions: (1) Sales increase from $1,080,000 to $1,296,000, thereby resulting in an increase in operating income from $58,320 to $64,800. (2) Sales remain constant, but Campbell reduces expenses, resulting in an increase in operating income from $58,320 to $60,480. (3) Campbell is able to reduce its invested capital from $540,000 to $432,000 without affecting operating income.
Compute Campbells profit margin, turnover and return on investment for the year. (Round "Profit margin" and "Return on investment" to 1 decimal place (i.e., 0.234 should be entered as 23.4).)
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Recompute Campbells ROI under each of the following independent assumptions: (Do not round intermediate calculations. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
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(1) Sales increase from $1,080,000 to $1,296,000, thereby resulting in an increase in operating income from $58,320 to $64,800.
(2) Sales remain constant, but Campbell reduces expenses, resulting in an increase in operating income from $58,320 to $60,480.
(3) Campbell is able to reduce its invested capital from $540,000 to $432,000 without affecting operating income.
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