Question

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

Required:

2. Fill in the missing information. (Round the "Turnover" and "ROI" answers to 2 decimal places.)

	Company
	A		B		C
Sales	$4,464,000		$975,000
Net operating income	$624,960		$165,750
Average operating assets	$1,860,000				$2,730,000
Margin		%		%	4	%
Turnover					1.90
Return on investment (ROI)		%	5.10	%		%

Answer 1

Margin=Net operating income/Sales

Turnover=Sales/Average operating assets

ROI=Net operating income/Average operating assets

	A	B	C
Sales	4,464,000	975,000	(2,730,000*1.9)=$5,187,000
Net operating income	624,960	165,750	(5,187,000*4%)=$207480
Average operating assets	1,860,000	(165750/0.051)=$3,250,000	2,730,000
Margin	(624960/4,464,000)=14%	(165750/975000)=17%	4%
Turnover	(4,464,000/1,860,000)=2.4	(975,000/3,250,000)=0.3	1.9
ROI	(624960/1,860,000)=33.6%	5.1%	(207480/2,730,000)=7.6%