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Stuart Corporation's balance sheet indicates that the company has $650,000 invested in operating assets. During Year 2, Stuart earned operating income of $84,500 on $1,300,000
Stuart Corporation's balance sheet indicates that the company has $650,000 invested in operating assets. During Year 2, Stuart earned operating income of $84,500 on $1,300,000 of sales. Required a. Compute Stuart's profit margin for Year 2. b. Compute Stuart's turnover for Year 2. c. Compute Stuart's return on investment for Year 2. d. Recompute Stuart's ROI under each of the following independent assumptions: (1) Sales increase from $1,300,000 to $1,560,000, thereby resulting in an increase in operating income from $84,500 to $95,160. (2).Sales remain constant, but Stuart reduces expenses, resulting in an increase in operating income from $84,500 to $87,100. (3) Stuart is able to reduce its invested capital from $650,000 to $520,000 without affecting operating income.
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