Mangrich International is considering a significant expansion to its product line. The sales force is excited about

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Mangrich International is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company's current offerings, but offer a complementary fit to its existing product line. Michael Powell, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Linda Huang, the company's CFO, has provided the following projections based on results with and without the new products.

Instructions

(a) Compute the company's return on assets ratio, profit margin ratio, and asset turnover ratio, both with and without the new product line.

(b) Discuss the implications that your findings in part (a) have for the company's decision.

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Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
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Related Book For  answer-question

Financial Accounting Tools for business decision making

ISBN: 978-0470534779

6th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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