Westerville Company reported the following results from last year’s operations:

Question

Westerville Company reported the following results from last year’s operations:

This year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics:

What is the ROI related to this year’s investment opportunity?

If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))

If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)

If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.))

Westerville Company reported the following results from last year’s operations:

Explanation / Answer

Statement showing computations Particulars Amount 1) Last year sales       1,400,000.00 Net Operating Income           280,000.00 Margin in % = 280,000/1,400,000 20.00% 2) Last year sales       1,400,000.00 Average operating assets           875,000.00 Turnover = 1,400,000/875,000                        1.60 3) Return on investment = 280,000/875,000 32.00% 4) This year investment oppurtunity Sales           480,000.00 Contribution = 80%           384,000.00 Fixed Expenses           336,000.00 Net Income = 384,000 - 336,000             48,000.00 Margin in % = 48,000/480,000 10% 5) Investment           300,000.00 Turnover = 480,000/300,000                        1.60 6) Return on incestment = 48,000/300,000 16.00% 7) Sales       1,880,000.00 Contribution Margin       1,104,000.00 Fixed Expenses           776,000.00 Income             328,000.00 Margin in % = 328,000/1880,000 17.45% 8) Assets s= 875,000+300,000       1,175,000.00 Turnover = 1880,000/1175,000                        1.60 9) Return oninvestment = 328,000/1175,000 27.91% 11) residual Income of last year = 280,000 - 875,000*15%           148,750.00

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