The following information regarding Brookes, Inc. is available: Sales Cost of go

Question

The following information regarding Brookes, Inc. is available: Sales Cost of goods sold Operating expenses Operating income Average invested capital $1,440,000 5630,000 $540,000 $270,000 $2,062,500 31. What is the return on investment for Brookes, Inc? A. 70%. B. 1996. C. 13%. D. 996. 32.What is the return on sales for Brookes, Inc.? A. 13%. B. 19%. C. 9%. D. 70%. 33. What is the capital turnover for Brookes, Inc.? A. 38%. B. 5456. C. 70%. D. 86% 34.Clancy Stores has sales of $1,574,000, cost of sales of $653,000, and operating expenses of $292,000. What is Clancy's return on sales? A. 58.5%. B. 41.5%. C. 6096. D. 40%. 35, Dwyer Company's ROI is 6% and its return on sales is 16%. What is its capital turnover? A. 396. B. 37.5%. C. 300%. D. Some other percentage.

Explanation / Answer

31. Answer: Option C. 13%

Return on investment = Operating income / Average invested capital = 270000 / 2062500 = 13.09% = 13%

32. Answer: Option B. 19%

Return on sales = Operating income / Sales = 270000 / 1440000 = 18.75% = 19%

33. Answer: Option C. 70%

Capital turnover = Sales / Average invested capital = 1440000 / 2062500 = 69.82% = 70%

34. Answer: Option D. 40%

Return on sales = Operating income / Sales = (1574000 – 653000 – 292000) / 1574000 = 629000 / 1574000 = 39.96% = 40%

35. Answer: Option B. 37.5%

ROI = Operating income / Average invested capital = 6%

Return on sales = Operating income / Sales = 16%

Capital turnover = Sales / Average invested capital

ROI = Return on Sales x Capital turnover

Capital turnover = ROI / Return on Sales = 6% / 16% = 37.5%

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