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Required information Exercise 11-13 Effects of Changes in Sales, Expenses, and Assets on ROI [LO11-1] [The...

Required information

Exercise 11-13 Effects of Changes in Sales, Expenses, and Assets on ROI [LO11-1]

[The following information applies to the questions displayed below.]

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Sales $ 5,700,000
Net operating income $ 285,000
Average operating assets $ 950,000

Exercise 11-13 Part 2

2. The entrepreneur who founded the company is convinced that sales will increase next year by 50% and that net operating income will increase by 200%, with no increase in average operating assets. What would be the company’s ROI? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Answer #1

Answer:-

Return on investment = Net operating income/Average operating assets*100

                                 =($855000/$950000)*100

                                 = 90%

Revised net operating income =$285000+ ($285000*200%)

=$285000+$570000 =$855000

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