WHAT IS THE ROA

m Check my v Problem 2-4 (Algo) 33.34 points As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing proposes that you increase inventories by 25 percent (a major investment to you). She has also given the information in the following table. Use Figure 2.3. eBook Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Print Proposed Impact of Inventory Increase 30% + (improvement) 0% 20% - reduction 10% + (increase) 25 % + Current Values $ 3,990,000 $ 2,850,000 $ 570,000 $ 199,500 420,000 195,000 795,000 $ 420,000 A A References de dese de A Oo a.Using the information given, complete the following table and calculate the ROA for current values and new values. (Round "ROA" to 2 decimal places.) Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets ROA Current Values $ 3,990,000 $ 2,850,000 $ 570,000 199,500 $ 420,000 $ 195,000 795,000 $ 420,000 New Values $ 5,187,000 $ 2,850,000 $ 456,000 $ 219,450 $ 525,000 $ 195,000 $ 795,000 $ 420,000