Question

Elway Company provided the following income statement for the last year:

Sales	$784,230,000
Less: Variable expenses	552,409,000
Contribution margin	$231,821,000
Less: Fixed expenses	194,592,000
Operating income	$37,229,000

At the beginning of last year, Elway had $38,659,000 in operating assets. At the end of the year, Elway had $41,363,000 in operating assets.

Required:

1. Compute average operating assets.
$

2. Compute the margin (as a percent) and turnover ratios for last year. If required, round your answers to two decimal places.

Margin	%
Turnover

3. Compute ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places.
%

Answer 1

Question -1

>> Average Operating Assets = ( $ 38,659,000 + $ 41,363,000 ) / 2

>> Average Operating Assets = $ 40,011,000.

Question -2

>> Margin % = Operating Income / Sales

>> Margin % = ( $ 37,229,000 * 100 ) / $ 784,230,000

>> Margin % = 4.75 %.

>> Turnover = Sales / Average Operating Assets

>> Turnover = $ 784,230,000 / $ 40,011,000

>> Turnover = 19.6 Times.

Question -3

>> Return on Investment ( ROI ) = Operating income / Average Operating Assets

>> Return on Investment ( ROI ) = ( $ 37,229,000 * 100 ) / $ 40,011,000

>> Return on Investment ( ROI ) = 93.05 %.