Answered: Company A Sales ... Net operating…

Company A Sales ... Net operating income $600,000 $500,000 $ $ 84,000 $ 70,000 $ Average operating assets Margin Turnover $1,000,000 3.5% $300,000 $ ? 7% ROI

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 29E

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Question

Comparison of Performance Using Return on Investment (ROI)

Comparative data on three companies in the same service industry are given below:

Required:

1. What advantages are there to breaking down the ROI computation into two separate elements, margin and turnover?

2. Fill in the missing information above, and comment on the relative performance of the three companies in as much detail as the data permit. Make

Company
A
Sales ...
Net operating income
$600,000 $500,000 $
$ 84,000 $ 70,000 $
Average operating assets
Margin
Turnover
$1,000,000
3.5%
$300,000 $ ?
7%
ROI

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