The income statement for Forklift Electrical Ltd for two years are shown below: Forklift Electrical Ltd Income Statement Comparison Current year Prior year (amounts in thousands) amounts in thousands) Sales $ 33,750 $ 24,750 Cost of goods sold 21,938 16,830 Gross profit $ 11,812 $ 7,920 Wages $ 8,775 $ 6,188 Utilities 675 250 Repairs 169 325 Selling 506 200 Total expenses $ 10,125 $ 6,963 Total assets (investment base) $ 4,500 $ 1,500 Required: a) Determine the operating income (loss) (dollars) for each year. b) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the amounts of the total assets as the investment base, calculate the return on investment. c) Was the decision to invest additional assets in the company successful? Explain.
The income statement for Forklift Electrical Ltd for two years are shown below: Forklift Electrical Ltd Income Statement Comparison Current year Prior year (amounts in thousands) amounts in thousands) Sales $ 33,750 $ 24,750 Cost of goods sold 21,938 16,830 Gross profit $ 11,812 $ 7,920 Wages $ 8,775 $ 6,188 Utilities 675 250 Repairs 169 325 Selling 506 200 Total expenses $ 10,125 $ 6,963 Total assets (investment base) $ 4,500 $ 1,500 Required: a) Determine the operating income (loss) (dollars) for each year. b) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the amounts of the total assets as the investment base, calculate the return on investment. c) Was the decision to invest additional assets in the company successful? Explain.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter1: Introduction To Business Activities And Overview Of Financial Statements And The Reporting Process
Section: Chapter Questions
Problem 23E
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Question
The income statement for Forklift Electrical Ltd for two years are shown below:
Forklift Electrical Ltd
Income Statement Comparison
|
Current year |
Prior year |
|
(amounts in thousands) |
amounts in thousands) |
Sales |
$ 33,750 |
$ 24,750 |
Cost of goods sold |
21,938 |
16,830 |
Gross profit |
$ 11,812 |
$ 7,920 |
|
|
|
Wages |
$ 8,775 |
$ 6,188 |
Utilities |
675 |
250 |
Repairs |
169 |
325 |
Selling |
506 |
200 |
Total expenses |
$ 10,125 |
$ 6,963 |
|
|
|
Total assets (investment base) |
$ 4,500 |
$ 1,500 |
|
|
|
Required:
- a) Determine the operating income (loss) (dollars) for each year.
- b) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the amounts of the total assets as the investment base, calculate the return on investment.
- c) Was the decision to invest additional assets in the company successful? Explain.
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