Question 1 Assignment 2

Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: Sales $769,200,000 Less: Variable expenses 546,486,000 Contribution margin $222.714,000 Less: Fixed expenses 197,796,000 Operating income $24,918,000 At the beginning of last year, Elway had $38,686,000 in operating assets. At the end of the year, Elway had $41,356,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin (as a percent) and turnover ratios for last year. If requlred, round your answers to two decimal places. Margin % Turnover 3. Compute ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places. 4. Rol measures a company's ability to generate income relative to tes investment in assets. The greater the ROI, the more efficiently the company is generating from its assets. S. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower Rot of a typical manufacturing company) 1. Elway Company might be a service organization with relatively few physical assets required to generate its sales revenue and income. ROI will be higher when the factors that create a company's sales or income are not formally recognized as assets (eg, human talent)