Question

Savary Corporation’s balance sheet indicates that the company has $200,000 invested in operating assets. During 2014, Savary earned $16,000 of operating income on $320,000 of sales.

Required
a. Compute Savary’s operating profit margin for 2014.
b. Compute Savary’s turnover for 2014.
c. Compute Savary’s return on investment for 2014.
d. Recompute Savary’s ROI under each of the following independent assumptions.
(1) Sales increase from $320,000 to $360,000, thereby resulting in an increase in operating income from $16,000 to $18,000.
(2) Sales remain constant, but Savary reduces expenses, thereby resulting in an increase in income from $16,000 to $16,800.
(3) Savary is able to reduce its operating assets from $200,000 to $160,000 without affecting income.



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  • CreatedFebruary 07, 2014
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