The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue Cost of goods sold £6,300,000 2,352,000 3,444,000 1,260,000 Operating expenses Average invested capital £ denotes the British pound sterling, the national monetary unit of Great Britain. Exercise 13-33 Part 3 3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 45 percent, compute the Firm's new sales margin. 3-b. Show how the new sales margin and the old capital turnover together result in a new ROI of 45 percent.
The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue Cost of goods sold £6,300,000 2,352,000 3,444,000 1,260,000 Operating expenses Average invested capital £ denotes the British pound sterling, the national monetary unit of Great Britain. Exercise 13-33 Part 3 3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 45 percent, compute the Firm's new sales margin. 3-b. Show how the new sales margin and the old capital turnover together result in a new ROI of 45 percent.
Chapter16: Multistate Corporate Taxation
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just
ended.
Sales revenue
Cost of goods sold
£6,300,000
2,352,000
Operating expenses
Average invested capital
£ denotes the British pound sterling, the national monetary unit of Great Britain.
Exercise 13-33 Part 3
3,444,000
1,260,000
3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 45 percent, compute the
firm's new sales margin.
3-b. Show how the new sales margin and the old capital turnover together result in a new ROI of 45 percent.
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