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PROBLEM 3 Return on Investment, Profit Margin, and Investment Turnover (20 possible points) Consider the following information for HandyCraft Stores for 2017 and 2018. 2017
| PROBLEM 3 Return on Investment, Profit Margin, and Investment Turnover (20 possible points) | ||||||
| Consider the following information for HandyCraft Stores for 2017 and 2018. | ||||||
| 2017 | 2018 | |||||
| Total Assets | $42,000,000 | $47,500,000 | ||||
| Noninterest-bearing current liabilities | 3,600,000 | 4,100,000 | ||||
| Net income | 3,000,000 | 4,000,000 | ||||
| Interest expense | 2,000,000 | 2,500,000 | ||||
| Sales | 57,000,000 | 81,000,000 | ||||
| Tax rate | 40% | 40% | ||||
| Required: | ||||||
| a. Compute ROI for both years. | ||||||
| b. Break ROI down into profit margin and investment turnover. | ||||||
| c. Comment on the change in financial performance between 2017 and 2018. | ||||||
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