Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Vernon Corporation's balance sheet indicates that the company has $670,000 invested in operating assets. During Year 2. Vernon earned operating income of $89.780 on $1,340,000

image text in transcribed
image text in transcribed
image text in transcribed
Vernon Corporation's balance sheet indicates that the company has $670,000 invested in operating assets. During Year 2. Vernon earned operating income of $89.780 on $1,340,000 of sales. Required a. Compute Vernon's profit margin for Year 2. b. Compute Vernon's turnover for Year 2 c. Compute Vernon's return on investment for Year 2 d. Recompute Vernon's ROI under each of the following independent assumptions: (1) Sales increase from $1.340,000 to $1,608,000, thereby resulting in an increase in operating income from $89.780 to $104,520. (2) Sales remain constant, but Vernon reduces expenses, resulting in an increase in operating income from $89,780 to $92,460, (3) Vernon is able to reduce its invested capital from $670,000 to $536,000 without affecting operating Income. Complete this question by entering your answers in the tabs below. Reg A to C ReqD Compute Vernon's profit margin, turnover and return on investment for Year 2. (Round "Profit margin" and "Return on Investment" to 1 decimal place.) Profit margin % 11 (2) Sales remain constant, but Vernon reduces expenses, resulting in an increase in operating income from $89,780 to $92.460 (3) Vernon is able to reduce its invested capital from $670,000 to $536,000 without affecting operating Income. Complete this question by entering your answers in the tabs below. Req A to C Reg D Compute Vernon's profit margin, turnover and return on investment for Year 2. (Round "Profit margin" and "Return on investment to 1 decimal place.) % Profit margin Turnover Return on investment times % KROQ Aloc ReqD> Complete this question by entering your answers in the tabs below. Req A to C Reg D Recompute Vernon's ROI under each of the following independent assumptions: (Do not round Intermediate calculations. Round your answers to 2 decimal places. (I.e.,0.2345 should be entered as 23.45).) (1) Sales increase from $1,340,000 to $1,608,000, thereby resulting in an increase in operating Income from $89,780 to $104,520. (2) Sales remain constant, but Vernon reduces expenses, resulting in an increase in operating income from $89,780 to $92,460. (3) Vernon is able to reduce its invested capital from $670,000 to $536,000 without affecting operating income. Show less Return on Investment % % (2) (3) %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A One Year Accounting Course

Authors: Trevor Gambling

21st Edition

0080130275, 9780080130279

More Books

Students also viewed these Accounting questions

Question

How do cultures and social communities shape communication?

Answered: 1 week ago