Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below,) CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below: Net operating income Average operating assets $ 4,500,000 $ 270,000 $ 900,000 3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,750,000 increase in sales, requiring a $350,000 increase in average operating assets, with a resulting $401,875 increase in net operating incomd, What would be the company's ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.) m on investment (ROI) 30.001%

Explanation / Answer

Commercialservices.com Corporation

(As per view of CFO)

Net operating revenue = 270,000 + 401,875

= 671,875

Average operating assets = 900,000 + 350,000

= 1,250,000

ROI = Net operating income/Net operating assets

= 671,875/1,250,000

= 53.75%

As per view of entrepreneur

Increse in operating revenue = 220%

= 270,000 x 220%

= 594,000

Hence, operating revenue in next year = 270,000 + 594,000

= 864,000

ROI = Net operating income/Average operating assets

= 864,000/900,000

= 96%

Alyeska Services Company

Margin =Net operating income/Sales

= 4,400,000/17,000,000

= 25.88%

Turnover = Sales/Average operating assets

= 17,000,000/36,400,000

= 46.70%

ROI = Net operating income/Average operating assets

= 4,400,000/36,400,000

= 12.09%

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