Chapter 10 Demo Solution

# Chapter 10 Demo Solution - Chapter10 DemoProblem1...

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Chapter 10 Demo Problem 1 Compute the Return on Investment Tundra Services Company, a division of a major oil company, provides  various services to the operators of the North Slope oil field in Alaska.  Data concerning the most recent year appear below:  Sales  \$18,000,000  Net operating income  \$5,400,000  Average operating assets  \$36,000,000  Required:   1. Compute the margin for Tundra Services Company.  2. Compute the turnover for Tundra Services Company.  3. Compute the return on investment (ROI) for Tundra Services  Company.  1.           Margin =  Net operating income/          Sales                 \$5,400,000/ = 30%        \$18,000,000     2.           Turnover =  Sales/          Average operating assets                 \$18,000,000/ = 0.5

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\$36,000,000     3.  ROI =  Margin x Turnover    30 % x 0.5 = 15%
Demo Problem 2 Effects of Changes in Sales, Expenses, and Assets on ROI

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Chapter 10 Demo Solution - Chapter10 DemoProblem1...

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