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Problem $13-43$ ROI and Performance Evaluations $($LO $13-2,13-4,13-8)$

$[$The following information applies to the questions displayed below.$]$

Kenneth Washburn, head of the Sporting Goods Division of Reliable Products, has just completed a miserable nine

months. $"$If it could have gone wrong, it did. Sales are down, income is down, inventories are bloated, and quite frankly, I$\text{'}$m

beginning to worry about my job," he moaned. Washburn is evaluated on the basis of ROI. Selected figures for the past

nine months follow.

In an effort to make something out of nothing and to salvage the current year's performance, Washburn was

contemplating implementation of some or all of the following four strategies:

a$.$ Write off and discard $$98,000$ of obsolete inventory. The company will take a loss on the disposal.

b$.$ Accelerate the collection of $$128,000$ of overdue customer accounts receivable.

c$.$ Stop advertising through year$-$end and drastically reduce outlays for repairs and maintenance. These actions are

expected to save the division $$233,000$ of expenses and will conserve cash resources.

d$.$ Acquire two competitors that are expected to have the following financial characteristics:

Problem $13-43$ Part $1$

Required:

$1-$a$.$ Define sales margin, capital turnover, and return on investment.

$1-$b$.$ Compute sales margin, capital turnover, and return on investment for the Reliable's Sporting Goods Division over the past nine

months.

Complete this question by entering your answers in the tabs below.

Req $1$B

Define sales margin, capital turnover, and return on investment.