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Solano Company has sales of $600,000, cost of goods sold of $420,000, other operating expenses of $55,000, average invested assets of $1,850,000, and a hurdle
Solano Company has sales of $600,000, cost of goods sold of $420,000, other operating expenses of $55,000, average invested assets of $1,850,000, and a hurdle rate of 10 percent. Required 1. Determine Solano's return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and answer to the nearest 2 decimal places, (Le., 0.1234 should be entered as 12.34%). Round your Investment Turnover ans wer to 4 decimal places. Profit Margin percentage Return on Investment Investment Turnover Profit Margin Residual Income Loss) 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario's impact on Solano's ROl and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.)) a. Company sales and cost of goods sold increase by 40 percent Return on Investment Residual Income (Loss) b. Operating expenses decrease by $14,500. Return on Investment Residual Income (Loss)
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