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The following information pertains to Bishop Concrete: The company\'s imputed in

ID: 2599350 • Letter: T

Question

The following information pertains to Bishop Concrete:

  

The company's imputed interest rate is 8%.
rev: 10_29_2012

11.

Required information

The capital turnover is:

16.92.

22.73.

26.00.

5.91.

3.85.

12.

Required information

The sales margin is:

4.40%.

32.00%.

13.75%.

16.92%.

26.00%.

13.

Required information

The ROI is:

26.00%.

4.40%.

13.75%.

16.92%.

32.00%.

14.

Required information

The residual income is:

$58,000.

$52,000.

$46,000.

$90,000.

$101,200.

  Sales revenue $2,500,000   Gross margin 800,000   Income 110,000   Invested capital 650,000

Explanation / Answer

Answer:-11)-Capital turnover ratio= Sales Revenue/Invested capital

                                                 = $2500000/$650000

                                                  =3.85 times

12)-Sales margin =Net income/Sales revenue*100

                            =$110000/$2500000*100

                            = 4.4%

13) Return on investment = Income from operations /Average operating assets*100

                                 =$110000/$650000*100

                                 = 16.92%

Where:-

Average operating assets = Invested capital

14)- Residual income= Net Operating income – (Average operating assets* Minimum required rate of return)

= $110000 –($650000*8%)

= $110000 - $52000

= $58000