The following data relate to Metalla Manufacturing Company for the past year: Sales revenue...............................................$9,000,000 Cost of goods
Question:
The following data relate to Metalla Manufacturing Company for the past year:
Sales revenue...............................................$9,000,000
Cost of goods sold..........................................4,950,000
Operating expenses.........................................3,600,000
Average invested capital...................................4,500,000
Required:
1. Calculate the company's return on sales, investment turnover and ROI for the past year.
2. If the sales and average invested capital remain the same in the current year, to what level would total expenses have to be reduced in order to increase the firms ROI to 15 per cent?
3. Assume that expenses are reduced, as calculated in requirement 2. Calculate the company's return on sales. Show how the new return on sales and the old investment turnover together would results in a PCI of 15 per cent for the current year.
Step by Step Answer:
1 2 Therefore total expenses cost of goods sold and operating expenses must ...View the full answer
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
