Respuesta :
Answer:
1) Last years' margin = Net operating income÷ Sales
= 240,000÷1,200,000
= 0.2= 20%
2) Last years' turnover = Sales ÷ Average operating assets
= 1,200,000 ÷ 600,000
= 2
3) Last years' return on investment = Margin ratio × turnover ratio
= 20% × 2 = 40%
4) Margin for this years' investment = Net operating income ÷ Sales
= 36,000 ÷ 240,000
= 0.15 = 15%
5) Turnover for this year = Sales ÷ Average operating assets
= 2,400,000 ÷ 600,000
= 4
6) Return on investment for this year = Margin ratio × turnover ratio
= 50% × 4 = 200%
7) Since this years' ROI is higher than that of last year, she would pursue the investment opportunity.
8) Yes, the owners of the company would want her to pursue the investment opportunity because of high ROI.
9) This years' residual income = Net operating income - ( required return× Investment)
= 36000 - ( 200% × 150,000)
= ( 264,000)
Answer:
Return on investment is the ratio of net income and investment. It is also referred to as the total amount earned by the investment. It is determined by the percentage invested and the fluctuation of the market.
Explanation:
Computation of last year margin:
[tex]\begin{aligned}\text{1) Last years' margin} &= \dfrac{\text{Net operating income}}{\text{Sales}} \\&= \dfrac{240,000}{1,200,000}\\&= 0.2\\&= 20 \% \end{aligned}[/tex]
computation of last year turnover:
[tex]\begin{aligned}\text{2) Last years' turnover} &= \dfrac{\text{Sales}} {\text{ Average operating assets}}\\ &= \dfrac{1,200,000}{600,000}\\ &= 2 \end{aligned}[/tex]
Computation of last year return on investment:
[tex]\begin{aligned}\\3) \text{Last years' return on investment} &=\dfrac {\text{Margin ratio}}{\text{turnover ratio}} \\&= 20\; \% \times 2 \\&=40 \;\%\end{aligned}[/tex]
Computation of margin for this year investment:
[tex]\begin{aligned}\text{4)Margin for this years' investment} &= \dfrac{\text{Net operating income}}{\text{sales}}\\&= \dfrac{36,000}{240,000}\\&= 0.15 \\&= 15\;\%\end{aligned}[/tex]
Computation of turnover for this year:
[tex]\begin{aligned} \text{5) Turnover for this year}&=\dfrac{\text{Sales}}{\text{Average operating assets}}\\&=\dfrac{2400000}{600000}\\&=4\end{aligned}[/tex]
Computation of return on investment for this year:
[tex]\begin{aligned} \text{6) Return on investment for this year}&=\text{Marginal Ratio} \times {\text{turnover ratio}\\&=50 \% \times 4\\&=200 \%\end{aligned}[/tex]
7) She would prefer or pursue the investment opportunities because the rate of interest is higher as compared to last year.
8) Because of the high rate of interest, the owner company pursues investment opportunities.
Computation of the residual income:
9) [tex]\text{This years' residual income}=\text{Net Operating income}-(\text{required return} \times \text{investment}})[/tex]
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