Cost Allocation and Responsibility Accounting 557 Learning Objective 5 29A Using ROI and RI to evaluate investment centers Consider the following condensed financial statements of Safe Money, Inc. The com- pany's target rate of return is 20% 3. Asset turnover ratio 18.00 2015 $ 61,000 SAFE MONEY, INC. Income Statement For the Year Ended December 31, 2016 Sales Revenue - 1 $ 9,000,000 Cost of Goods Sold 5,200,000 Gross Profit 3,800,000 Operating Expenses 3,350,000 Operating Income 450,000 Other Expenses: Interest Expense (31,000) Income Before Income Tax Expense 419,000 Income Tax Expense 146,650 Net Income $ 272,350 SAFE MONEY, INC. Comparative Balance Sheet As of December 31, 2016, and 2015 2016 Assets Cash $ 73,000 Accounts Receivable 58,200 Supplies 1,800 Property, Plant, and Equipment, net 304,000 Patents, net 153,000 Total Assets $ 590,000+ 1,200 211,000 110,000 $ 410,000 180,00 Liabilities and Stockholders' Equity Accounts Payable $ 26,000 Short-term Notes Payable 145,000 Long-term Notes Payable 193,000 Common Stock, no Par 205,000 Retained Earnings 21,000 Total Liabilities and Stockholders' Equity $ 590,000 $ 28,000 51,000 123,500 197,000 10,500 $ 410,000 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. .nr. evaluate investment centers any is segmented Learning Objective 5