Question

Comparative data on three companies in the same service industry are given below.

Required:

2. Fill in the missing information. (Do not round intermediate calculations. Round the "Turnover" and "ROI" answers to 2 decimal places.)

	Companies in the Same Industry
	A		B		C
Sales	$4,020,000		$1,620,000
Net operating income	$562,800		$194,400
Average operating assets	$2,010,000				$2,900,000
Margin		%		%	4	%
Turnover		times		times	1.50	times
Return on investment (ROI)		%	7.20	%		%

Answer 1

Margin=Net operating income/Sales

Turnover=Sales/Average operating assets

ROI=Net operating income/Average operating assets

	A	B	C
Sales	4,020,000	1,620,000	(2,900,000*1.5)=$4,350,000
Net operating income	562,800	194400	(4,350,000*4%)=$174,000
Average operating assets	2,010,000	(194400/0.072)=$2,700,000	2,900,000
Margin	(562800/4,020,000) =14%	(194400/1,620,000) =12%	4%
Turnover	(4,020,000/2,010,000)=2	(1,620,000/2,700,000)=0.6	1.5
ROI	(562800/2,010,000) =28%	7.2%	(174,000/2,900,000) =6%