Answer:
2017
ROI = 18%
Profit Margin = 30%
2018
ROI = 25.2%
Investment Turnover = 84%
Explanation:
The formulas for the required ratio are as follows,
ROI = Operating income / Average invested assets
Profit margin = Operating Income / Sales
For 2017,
ROI = 6,948,000 / 38,600,000 = 0.18 = 18%
Profit margin = 6,948,000 / 23,160,000 = 0.3 = 30% of sales
For 2018, we compute increased sales first
Sales = 23,160,000 * 1.4 = $32,424,000 after 40% increase
with profit margin staying the same, profit for 2018
Profit = $32,424,000 * 0.3 = $9,727,200
Using the earlier formulas,
ROI = $9,727,200 / 38,600,000 = 0.252 = 25.2%
Investment turnover = Sales / Average invested assets
Investment Turnover = $32,424,000 / 38,600,000 = 0.84 = 84%
Hope that helps.
