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Question

Baird Corporation's balance sheet indicates that the company has $520,000 invested in operating assets. During

2018, Baird earned operating income of $54,080 on $1,040,000 of sales.

 

Required

A.Compute Baird's profit margin for 2018.

B.Compute Baird's turnover for 2018.

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C. Compute Baird's return on investment for 2018.

D. Recompute Baird's ROI under each of the following independent assumptions:

(1) Sales increase from $1,040,000 to $1,248,000, thereby resulting in an increase in operating income from $54,080 to $62,400.

(2) Sales remain constant, but Baird reduces expenses, resulting in an increase in operating income from $54,080 to $56,160.

(3) Baird is able to reduce its invested capital from $520,000 to $416,000 without affecting operating income.

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Top Answer

A) Profit Margin = 5.2% B) Turnover = 2 times... View the full answer

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