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Titan Corporation has different segments. The following financial statements apply to the segment named Mu Segment. Mu Segment Income Statement for the Year Ended June

Titan Corporation has different segments. The following financial statements apply to the segment named "Mu Segment."

Mu Segment Income Statement for the Year Ended June 30, Year 17:

  • Sales Revenue: $600,000
  • Cost of Goods Sold: $360,000
  • Gross Margin: $240,000
  • Operating Expenses: $120,000
  • Depreciation Expense: $60,000
  • Operating Income: $60,000
  • Nonoperating Income: $50,000
  • Loss on Sale of Equipment: $30,000
  • Net Income: $80,000

Mu Segment Balance Sheet as of June 30, Year 17:

  • Cash: $75,000
  • Accounts Receivable: $105,000
  • Inventory: $120,000
  • Equipment (less accumulated depreciation): $210,000
  • Total Assets: $510,000
  • Accounts Payable: $80,000
  • Notes Payable: $90,000
  • Stockholders' Equity: $340,000

Required:

  1. Compute the ROI for Mu Segment.
  2. Titan Corporation has a target ROI of 25%. Mu Segment has an investment opportunity of $400,000 at an ROI of 27%. Calculate the new ROI if the investment is made.
  3. Determine the net profit margin for Mu Segment.
  4. Calculate the asset turnover ratio for Mu Segment.
  5. Evaluate if Mu Segment achieved the desired ROI after the new investment.

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