Question

The following information pertains to Bishop Concrete:

Sales revenue	$1,850,000
Gross margin	670,000
Income	97,000
Invested capital	520,000

  
The company's imputed interest rate is 10%.

1.) The capital turnover is:

3.56.

28.11.

19.07.

18.65.

5.36.

2.) The sales margin is:

14.48%.

5.24%.

36.22%.

18.65%.

28.11%.

3.)

The ROI is:

18.65%.

5.24%.

28.11%.

36.22%.

14.48%.

4.)

The residual income is:

$87,300.

$45,000.

$30,000.

$52,000.

$88,000.

Answer 1

1) Capital turnover = Sales/Invested capital

                                = 1850000/520000

Capital turnover = 3.56

so answer is a) 3.56

2) Sale margin = Net income*100/sale

                         = 97000*100/1850000

Sales margin = 5.24%

so answer is b) 5.24%

3) ROI = Income*100/Invested capital

            = 97000*100/520000

ROI = 18.65%

so answer is a) 18.65%

4) Residual income = 97000-(520000*10%) = 45000

so answer is b) 45000