The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended Sales revenue 6,650,000 Cost of goods sold 2,499,000 Operating expenses 3,685,500 Average invested capital 1,330,000 denotes the British pound sterling, the national monetary unit of the United Kingdom Although the euro is used in most European markets, the U K continues to use pounds sterling for its national currency 1 value 8 33 points Required information Required 1 Compute the companys sales margin, capital turnover, and ROI 2 If the sales and average invested capital remain the same during the next year, to what level would total expenses have to be reduced in order to improve the firms ROI to 40 percent 3 a Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 40 percent, compute the firm's new sales margin (Round your Percentage answer to 2 decimal places (i e , 1234 should be entered as 12 34)) 3 b Show how the new sales margin and the old capital turnover together result in a new ROI of 40 percent (Round your Percentage answer to 2 decimal places (i e , 1234 should be entered as 12 34))

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 16, 2024

The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue 6,650,000 Cost

The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended.


Sales revenue		6,650,000
Cost of goods sold		2,499,000
Operating expenses		3,685,500
Average invested capital		1,330,000

denotes the British pound sterling, the national monetary unit of the United Kingdom. Although the euro is used in most European markets, the U.K. continues to use pounds sterling for its national currency.

value: 8.33 points

Required information

Required:

1.	Compute the companys sales margin, capital turnover, and ROI.

2.	If the sales and average invested capital remain the same during the next year, to what level would total expenses have to be reduced in order to improve the firms ROI to 40 percent?

3-a.	Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 40 percent, compute the firm's new sales margin. (Round your "Percentage" answer to 2 decimal places. (i.e., .1234 should be entered as 12.34))

3-b.	Show how the new sales margin and the old capital turnover together result in a new ROI of 40 percent. (Round your "Percentage" answer to 2 decimal places. (i.e., .1234 should be entered as 12.34))