Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources. The margin, turnover, and return on investment (ROI) of the company.

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Answer 1

Question

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

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Return on Investment (ROI) Analysis The contribution formal income statement for Huerra Company for last year is given below: The company had average operating assets of $2,000,000 during the year. Required: 1. Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (l) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $400,000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $32,000 per year by using less costly materials. 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that…

Profit Margin, Investment Turnover, and ROI Briggs Company has income from operations of $132,756, invested assets of $299,000, and sales of $1,106,300. Use the DuPont formula to compute the return on investment. If required, round your answers to two decimal places. a. Profit margin % b. Investment turnover c. Return on investment %

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Answer 2

Question

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Expert Solution & Answer

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Answer 3

Question

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Answer 6

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

Answer 7

Chapter 11, Problem 11.24P

1.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The margin, turnover, and return on investment (ROI) of the company.

Answer 8

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

Answer 9

2.

To determine

Introduction: Operating assets refer to those assets which are acquired by the company to support its ongoing business operations. These are the assets that contribute to generating revenue. For instance, cash, accounts receivable, prepaid expenses, and so on.

The effect of reduction in the average level of inventory on the margin and turnover of the company and computation of the revised return on investment.

Answer 10

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

Answer 11

3.

To determine

Introduction: Cost saving refers to the benefit realized by the company by reducing the overall spending or cost of conducting a business. Cost saving has a direct impact on the profit and loss of the company. It is also known as hard saving or cost reduction.

The effect of the cost saving on the margin and turnover of the company and computation of the revised return on investment.

Answer 12

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

Answer 13

4.

To determine

Introduction: Production costs refer to the total costs incurred by an organization in order to manufacture a product or provide a service to the customers. Production cost includes both the direct cost as well as indirect costs. For example, raw materials, labor, general overhead, and so on.

The effect of the purchase of plant and machinery, reduction in production cost on the margin and turnover of the company, and computation of the revised return on investment.

Answer 14

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

Answer 15

5.

To determine

Introduction: Sales revenue is the amount earned by the company by selling goods or providing services to the customers. It is determined by multiplying the number of units sold with the selling price per unit. The amount of sales revenue is recorded under the head of gross revenue or net revenue in the income statement.

The effect of an increase of 20% in sales on the margin and turnover of the company and computation of the revised return on investment.

Answer 16

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

Answer 17

6.

To determine

Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.

The effect of scrapped inventory on the margin and turnover of the company and computation of the revised return on investment.

Answer 18

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Answer 19

7.

To determine

Introduction: Cash and cash equivalents are short-term or current investments that can be converted into a specific amount of cash quickly. An instrument that can be converted into cash within 3 months or less refers to a cash equivalent. In a balance sheet of a company, cash equivalent is reported under the main head named assets and the subhead current assets of the balance sheet.

The effect of reduction in cash on the margin and turnover of the company and computation of the revised return on investment.

Answer 20

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Answer 21

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Answer 22

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Answer 23

Ch. 11 - Prob. 11.1Q Ch. 11 - Prob. 11.2Q Ch. 11 - Prob. 11.3Q Ch. 11 - Prob. 11.4Q Ch. 11 - Prob. 11.5Q Ch. 11 - Prob. 11.6Q Ch. 11 - Prob. 11.7Q Ch. 11 - Prob. 11.8Q Ch. 11 - Prob. 11.9Q Ch. 11 - Why is using sales dollars as an allocation base...

Solution Summary: The author explains the ratio between the net income and the assets or capital employed. The margin, turnover, and return on investment are 9%, 2, and 18% respectively.

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