Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 9-20A Return on Investment (ROI) Analysis [LO9-1] The contribution format income statement for Huerra Company for last year is given below: Sales Variable expenses
Problem 9-20A Return on Investment (ROI) Analysis [LO9-1] The contribution format income statement for Huerra Company for last year is given below: Sales Variable expenses Total Unit $1,002,000 $50.10 601,200 30.06 Contribution margin Fixed expenses 400,800 316,800 20.04 15.84 Net operating income Income taxes @ 40% 84,000 33,600 4.20 1.68 Net income 50,400 $ 2.52 The company had average operating assets of $491,000 during the year. Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Margin Turnover ROI 8.38% 2.04 17.11:% 5. Sales are increased by 20%; operating assets remain unchanged. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Effect % Margin Turnover ROI % 6. Obsolete inventory carried on the books at a cost of $18,000 is scrapped and written off as a loss. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Effect % Margin Turnover ROI % 7. The company uses $185,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Effect % Margin Turnover ROI %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started