Question

3.

The Portland Division's operating data for the past two years is as follows:

		Year 1			Year 2
Return on investment		6	%		9	%
Net operating income	$	?		$	306,000
Turnover		?			2
Margin		?			?
Sales	$	2,280,000			?

The Portland Division's margin in Year 2 was 150% of the margin for Year 1.

The net operating income for Year 1 was:

$284,667

$226,000

$102,600

$68,400

Answer 1

Answer = $68400

Explantion:

ROI = Net operating income (ROI) / Average operating assets (AOA)

For year 2,

0.09 = 306000 / AOA

AOA = $3400000

Turnover = Sales / AOA

2 = Sales / 3400000

Sales = $6800000

Margin = NOI / Sales = $306000 / $6800000 = 0.045 = 4.5%

Margin, year 2 = 150% x Margin, year 1

4.5% = 1.5 x Margin, year 1

Margin, year 1 = 3%

0.03 = NOI, year 1 / $2280000

NOI, year 1 = $68400

I have given detailed solution to your problem, in case of any query please comment and

PLEASE DO NOT FORGET TO GIVE A THUMBS UP