Answer:
The question is not complete ,find below complete part of the question:
The entrepreneur who founded the company is convinced that sales will increase next year by 60% and that net operating income will increase by 210 %, with no increase in average operating assets. What would be the company’s ROI? 3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,100,000 increase in sales, requiring a $275,000 increase in average operating assets, with a resulting $107,800 increase in net operating income. What would be the company’s ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
ROI is 99.20%
ROI is 33.76%
Explanation:
ROI under the first scenario;
Return on Investment(ROI)=net income/average operating assets*100
sales forecast $3,400,000*(1+60%)=$5,440,000.00
net operating income forecast $272,000*(1+210%)=$843,200
average operating assets is $850,000
forecast ROI=$843,200.00/*$850,000*100
forecast ROI=99.2%
ROI under the second scenario:
sales forecast($3,400,00+$1,100,000)=$4,500,000
net operating income forecast ($272,000+$107,800)=$379,800
average operating assets ($850,000+$275,000)=$1,125,000
forecast ROI=$379,800/$1,125,000
=33.76%
