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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.

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Solution Summary

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

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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 ...

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