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# Solving for unknowns

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J
Income: \$280,000
Revenue: \$_______
Invested capital: \$______
Return on sales: 7%
Capital turnover: 4
Rate on return on invested capital: _____%
Cost of capital: 16%
Economic profit: \$_____

K
Income: \$_____
Revenue: \$_______
Invested capital: \$3,000,000
Return on sales: 4%
Capital turnover: _____
Rate on return on invested capital: 20%
Cost of capital: 12%
Economic profit: \$_____

L
Income: \$_____
Revenue: \$_______
Invested capital: \$16,000,000
Return on sales: ____%
Capital turnover: 3
Rate on return on invested capital: 15%
Cost of capital: ____%
Economic profit: \$320,000

1. Fill in all blanks.
2. Which division is the best performer? Explain.

#### Solution Preview

J
Income: \$280,000
Revenue: \$_______

Return on Sales = Net Income/Revenue
Revenue = 280,000/7% = 4,000,000
Invested capital: \$______

Capital turnover = Revenue/Invested capital
Invested capital = 4,000,000/4 = 1,000,000

Return on sales: 7%
Capital turnover: 4
Rate on return on invested capital: _____%

Rate of return on invested capital = Net Income/Invested capital = 280,000/1,000,000 = 28%

Cost of capital: 16%
Economic profit: \$_____

Economic ...

#### Solution Summary

The solution explains how to solve for various financial accounting variables, including revenue, invested capital, return on sales, capital turnover.

\$2.19