ZNet Co. is a web-based retail company. The company reports the following for 2015.
Sales . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
Operating income . . . . . . . . . . . . . 1,000,000
Average invested assets. . . . . . . . . 12,500,000
The company’s CEO believes that sales for 2016 will increase by 20%, and both profit margin (%) and the level of average invested assets will be the same as for 2105.
1. Compute return on investment for 2105.
2. Compute profit margin for 2015.
3. If the CEO’s forecast is correct, what will return on investment equal for 2016?
4. If the CEO’s forecast is correct, what will investment turnover equal for 2016?