The income statement for Huerra Company for last year is provided below:

The company had average operating assets of $19,000,000 during the year.

Required:

1. Compute the companys ROI for the period using the ROI formula stated in terms of margin and turnover. (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

2. Consider each of the following questions separately and then compute the new ROI figure. Indicate whether the ROI will increase, decrease, or remain unchanged as a result of the events described.

a. By using JIT, the company is able to reduce the average level of inventory by $400,000. (The released funds are used to pay off short-term creditors.) (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Sales Less: Variable expenses Contribution margin Less: Fixed expense Net operating income Less: Income taxes @ 30% Net income Total $38,000,000 22,800,000 15, 200,000 7,600,000 7,600,000 2, 280,000 $ 5,320,000 Unit $ 380.00 228.00 152.00 76.00 76.00 22.80 $ 53.20