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Solano Company has sales of $580,000, cost of goods sold of $410,000, other operating expenses of $54,000, average invested assets of $1,800,000, and a hurdle
Solano Company has sales of $580,000, cost of goods sold of $410,000, other operating expenses of $54,000, average invested assets of $1,800,000, and a hurdle rate of 9 percent. Required: 1. Determine Solano's return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario's impact on Solano's ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold increase by 30 percent. b. Operating expenses decrease by $13,500. c. Operating expenses increase by 10 percent. d. Average invested assets increase by $340,000. e. Solano changes its hurdle rate to 15 percent. Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Reg 20 Req 2D Reg 2E Determine Solano's return on investment (ROI), investment turnover, profit margin, and residual income. (Loss amounts should be indicated with a minus sign. Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) % Return on Investment Investment Turnover Profit Margin Residual Income (Loss) %
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