Franklin Corporation's balance sheet indicates that the company has $570,000 invested in operating assets. During Year 2, Franklin earned operating income of $64,980 on $1,140,000 of sales. Required a. Compute Franklin's profit margin for Year 2. b. Compute Franklin's turnover for Year 2. c. Compute Franklin's return on investment for Year 2. d. Recompute Franklin's ROI under each of the following independent assumptions: (1) Sales increase from $1,140,000 to $1,368,000, thereby resulting in an increase in operating income from $64,980 to $82,080. (2) Sales remain constant, but Franklin reduces expenses, resulting in an increase in operating income from $64,980 to $67,260. (3) Franklin is able to reduce its invested capital from $570,000 to $456.000 without affecting operating income. Complete this question by entering your answers in the tabs below. Req A to C Reg D Compute Franklin's profit margin, turnover and return on investment for Year 2. Note: Round "Profit margin" and "Return on investment" to 1 decimal place (i.e., 0.234 should be entered as 23.4). Profit margin Turnover Return on investment times
Franklin Corporation's balance sheet indicates that the company has $570,000 invested in operating assets. During Year 2, Franklin earned operating income of $64,980 on $1,140,000 of sales. Required a. Compute Franklin's profit margin for Year 2. b. Compute Franklin's turnover for Year 2. c. Compute Franklin's return on investment for Year 2. d. Recompute Franklin's ROI under each of the following independent assumptions: (1) Sales increase from $1,140,000 to $1,368,000, thereby resulting in an increase in operating income from $64,980 to $82,080. (2) Sales remain constant, but Franklin reduces expenses, resulting in an increase in operating income from $64,980 to $67,260. (3) Franklin is able to reduce its invested capital from $570,000 to $456.000 without affecting operating income. Complete this question by entering your answers in the tabs below. Req A to C Reg D Compute Franklin's profit margin, turnover and return on investment for Year 2. Note: Round "Profit margin" and "Return on investment" to 1 decimal place (i.e., 0.234 should be entered as 23.4). Profit margin Turnover Return on investment times
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...
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Step 1: Requirement a, Computation of Profit margin
VIEWStep 2: Requirement b, Computation of Turnover
VIEWStep 3: Requirement c, Computation of ROI
VIEWStep 4: Requirement d1, Computation of ROI
VIEWStep 5: Requirement d2, Computation of ROI
VIEWStep 6: Requirement d3, Computation of ROI
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