Answer:
profit margin: 7.09%
<u />
<u>Turnover: </u>
Assets : 1.85
Account Receivable: 11.53
Inventory: 9.05
ROI: 28.94%
2.- residual income 91,395
Explanation:
sales 4,700,000
net income 333,000
<u>profit margin:</u>
net income / sales
333,000 / 4,700,000 = 0,070851 = 7.09%
<u>Turnovers:</u>
Will be sales over an asset account to calcualte how many times the assets converts to cash or rotate.
the average will be calcualte as (beginning + ending)/2
<em>Assets turnover:</em>
sales/average assets
sales 4,700,000
(2,505,000 + 2,585,000) / 2 = 2,545,000
Ratio: 1,8467 = 1.85
<em>Account Receivable Turnover:</em>
sales/ average turnover
sales 4,700,000
(344,000 +471,000)/2 = 407,500
Ratio: 11,5337 = 11.53
<em>Inventory Turnover</em>
Sales/ average inventory
Sales 4,700,000
(568,000 + 471,000)/2 = 519,500
Inventory turnover: 9,04716 = 9.05
<u>ROI</u>
net income / average equity
<u>where:</u>
average equity : (beginning + ending)/2
1,092,000 + 1,209,000 = 1,150,500
333,000/1,150,500 = 0,28943
<u></u>
<u>Residual income:</u>
net income - Equity x expected return
333,000 - 1,150,500 x 0.21 =
333,000 - 241,605 = 91,395
