Purpose: Compute the return on investment for an investment center

KSAs: Understand DuPont formula, investment turnover, and rate of return on investment

Points: $20$

Admin: None

Discussion Initial Response Due by Wednesday: The owner of Java Java Java Coffee Carts is considering ways to increase the return on investment. The condensed income statement for the company is below $($assume no support department charges$).$ For calculations, round your answers two decimal places.

Java Java Java Coffee Carts

Condensed Income Statement

Sales $ $130,580,100\mathrm{.}00$

Cost of goods sold $ $82,265,000\mathrm{.}00$

Gross profit $ $48,315,000\mathrm{.}00$

Administrative expenses $ $22,100,000\mathrm{.}00$

Operating income $ $26,215,100\mathrm{.}00$

Part $1$: Using the DuPont formula for return on investment, determine the following, assuming that additional assets of $$90,000,000$ have been invested in the company.

profit margin

investment turnover

rate of return on investment

Part $2$: If expenses could be reduced by $$4,367,000$ without decreasing sales, what would be the impact on the following:

profit margin

investment turnover

rate return on investment