Consider the following condensed financial statements of Forever Free, Inc. The company's target rate of return is 40%.
FOREVER FREE, INC.
Income Statement
For the Year Ended December 31, 2018
Net Sales Revenue.................................... $ 3,500,000
Cost of Goods Sold .................................... 2,200,000
Gross Profit ............................................. 1,300,000
Operating Expenses ....................................... 950,000
Operating Income ......................................... 350,000
Interest Expense .......................................... 350,000
Other Income and (Expenses):
Interest Expense ........................................... (27,000)
Income Before Income Tax Expense .................... 323,000
Income Tax Expense ...................................... 113,050
Net Income ...............................................$ 209,950
FOREVER FREE, INC.
Comparative Balance Sheet
As of December 31, 2018 and 2017

Requirements
1. Calculate the company's ROI. Round all of your answers to four decimal places.
2. Calculate the company's profit margin ratio. Interpret your results.
3. Calculate the company's asset turnover ratio. Interpret your results.
4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results.
5. Calculate the company's RI. Interpret your results.

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2018 2017 Assets $ 64,000 $ 52,000 Cash Accounts Receivable 49,200 17,800 Supplies 1,000 400 229,800 Property, Plant, and Equipment, net 331,800 119,000 $ 419,000 Patents, net 135,000 $ 581,000 Total Assets Liabilities and Stockholders' Equity $ 17,000 $ 19,000 Accounts Payable Short-term Notes Payable 136,000 42,000 Long-term Notes Payable 114,500 184,000 Common Stock, no Par 232,000 242,000 Retained Earnings 12,000 1,500 $ 581,000 $ 419,000 Total Liabilities and Stockholders' Equity