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Vertex Solutions operates multiple segments. The following financial statements apply to the segment named Xi Segment. Xi Segment Income Statement for the Year Ended September

Vertex Solutions operates multiple segments. The following financial statements apply to the segment named "Xi Segment."

Xi Segment Income Statement for the Year Ended September 30, Year 19:

  • Sales Revenue: $700,000
  • Cost of Goods Sold: $420,000
  • Gross Margin: $280,000
  • Operating Expenses: $160,000
  • Depreciation Expense: $80,000
  • Operating Income: $40,000
  • Nonoperating Income: $60,000
  • Loss on Sale of Equipment: $40,000
  • Net Income: $60,000

Xi Segment Balance Sheet as of September 30, Year 19:

  • Cash: $90,000
  • Accounts Receivable: $125,000
  • Inventory: $140,000
  • Equipment (less accumulated depreciation): $300,000
  • Total Assets: $655,000
  • Accounts Payable: $100,000
  • Notes Payable: $110,000
  • Stockholders' Equity: $445,000

Required:

  1. Compute the ROI for Xi Segment.
  2. Vertex Solutions has a target ROI of 27%. Xi Segment has an investment opportunity of $600,000 at an ROI of 30%. Calculate the new ROI if the investment is made.
  3. Determine the net profit margin for Xi Segment.
  4. Calculate the asset turnover ratio for Xi Segment.
  5. Evaluate whether Xi Segment achieved the desired ROI after the new investment.

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