Elway Company provided the following income statement for the last
Elway Company provided the following income statement for the last year:
Sales ............... $ 980,000
Less: Variable expenses ....... 670,000
Contribution margin .......... $310,000
Less: Fixed expenses ......... 172,800
Operating income .......... $137,200
At the beginning of last year, Elway had $ 44,500 in operating assets. At the end of the year, Elway had $ 33,900 in operating assets.
Required:
1. Compute average operating assets.
2. Compute the margin and turnover ratios for last year.
3. Compute ROI.
4. Briefly explain the meaning of ROI.
5. Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
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