Question

Liz Raiborn Inc. has the following financial results for the years 2019 through 2021 for its three regional divisions: 2019 2020 2021 Revenue Southwest $ 14,675 $ 21,775 $ 25,775 Midwest 6,475 6,775 6,975 Southeast 12,175 12,775 13,075 Total $ 33,325 $ 41,325 $ 45,825 Net Operating Income Southwest $ 875 $ 975 $ 1,125 Midwest 1,025 1,375 1,325 Southeast 775 975 1,375 Total $ 2,675 $ 3,325 $ 3,825 Average Total Assets Southwest $ 13,775 $ 13,975 $ 16,575 Midwest 4,475 3,975 3,975 Southeast 5,075 5,375 5,375 Total $ 23,325 $ 23,325 $ 25,925
Calculate Return on Sales(ROS), asset turnover (AT), and return on investment (ROI) for each division and also for the firm as a whole for each of the three years 2019, 2020, and 2021.

Answer 1

Answer:

return on sales = operating profit / net sales

Southwest 2019 = $875 / $14,675 = 5.96%

Southwest 2020 = $975 / $21,775 = 4.48%

Southwest 2021 = $1,125 / $25,775 = 4.36%

Midwest 2019 = $1,025 / $6,475 = 15.83%

Midwest 2020 = $1,375 / $6,775 =  20.3%

Midwest 2021 = $1,325 / $6,975 = 19%

Southeast 2019 = $775 / $12,175 = 6.37%

Southeast 2020 = $975 / $12,775 = 7.63%

Southeast 2021 = $1,375 / $13,075 = 10.52%

asset turnover = net sales / average total assets

Southwest 2019 = $14,675 / $13,775 = 1.07

Southwest 2020 = $21,775 / $13,975 = 1.56

Southwest 2021 = $25,775 / $16,575 = 1.56

Midwest 2019 = $6,475 / $4,475 = 1.45

Midwest 2020 = $6,775 / $3,975 = 1.7  

Midwest 2021 = $6,975 / $3,975 = 1.75

Southeast 2019 = $12,175 / $5,075 = 2.4  

Southeast 2020 = $12,775 / $5,375 = 2.38

Southeast 2021 = $13,075 / $5,375 = 2.43

return on investment = net income / cost of investment

Southwest 2019 = $875 / $13,775 = 6.35%

Southwest 2020 = $975 / $13,975 = 6.98%

Southwest 2021 = $1,125 / $16,575 = 6.79%

Midwest 2019 = $1,025 / $4,475 = 22.9%

Midwest 2020 = $1,375 / $3,975 = 34.59%

Midwest 2021 = $1,325 / $3,975 = 33.33%

Southeast 2019 = $775 / $5,075 = 15.27%

Southeast 2020 = $975 / $5,375 = 18.14%

Southeast 2021 = $1,375 / $5,375 = 25.58%

Explanation:

Revenue 2019 2020 2021

Southwest $ 14,675 $ 21,775 $ 25,775

Midwest 6,475 6,775 6,975

Southeast 12,175 12,775 13,075

Total $ 33,325 $ 41,325 $ 45,825

Net Operating Income 2019 2020 2021

Southwest $ 875 $ 975 $ 1,125

Midwest 1,025 1,375 1,325

Southeast 775 975 1,375

Total $ 2,675 $ 3,325 $ 3,825

Average Total Assets 2019 2020 2021

Southwest $ 13,775 $ 13,975 $ 16,575

Midwest 4,475 3,975 3,975

Southeast 5,075 5,375 5,375

Total $ 23,325 $ 23,325 $ 25,925