Answer:
See explaination
Explanation:
1. see attachment for the table
2: Conceptual connection
Year 4 : Sales = 14500000, Operating Income = 1200000, Average Assets = 15000000
ROI= Operating Income/Average Assets = 1200000/15000000 = 0.08
Margin = Operating income/Sales = 1200000/14500000 = 0.08
Turnover ratio :Sales/Average Assets = 14500000/15000000 = 0.97
The ROI has increased in year 4 over the 3rd Year’s ROI because Operating income is increased but inventory were same . So we are earning more amount of profit from the same level of investment which is the reason of increase in ROI.
3. Conceptual connection
Year 4 : Sales = 9000000, Operating Income = 945000, Average Assets = 12000000
ROI= Operating Income/Average Assets = 945000/12000000 = 0.08
Margin = Operating income/Sales = 945000/9000000 = 0.11
Turnover ratio :Sales/Average Assets = 9000000/12000000 = 0.75
The ROI has exceeded level of year 3 because operating profit is same but the investment in assets is lower under year 4. So we are able to earn same amount i.e. 945000 by investing lesser. The same return of profit with lower investment has increased the ROI.
4. Conceptual Connection
Year 4 : Sales = 14500000, Operating Income = 1200000, Average Assets = 12000000
ROI= Operating Income/Average Assets = 1200000/12000000 = 0.10
Margin = Operating income/Sales = 1200000/14500000 = 0.08
Turnover ratio :Sales/Average Assets = 14500000/12000000 = 1.21
The ROI has exceeded the level of year 3 because operating profit is increased at the same time the investment in assets is also decresed. So we are able to earn more amount by investing lesser. So there are two factors which has increased ROI first is more operating income and second the lower investment. We are able to earn more with lesser investment.