Liu Company provided the following income statement for last year:

Sales ...............................................$1,040,000

Less: Variable expenses ........................ 700,250

Contribution margin ............................ 339,750

Less: Fixed expenses ............................ 183,750

Operating income ............................... $156,000

At the beginning of last year, Liu had $28,300 in operating assets. At the end of the year, Liu had $23,700 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 Liu Company is relatively