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Return on investment (ROI)

Exercise 12-14 Effects of Changes in Sales, Expenses, and Assets on ROI [LO2]
BusServ.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Sales $ 7,900,000
Net operating income $ 780,000
Average operating assets $ 2,500,000
________________________________________
Consider each of the following requirements independently.

Requirement 1:
Compute the company's return on investment (ROI). (Round interim calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Return on investment (ROI) =
%

Requirement 2:
The entrepreneur who founded the company is convinced that sales will increase next year by 130% and that net operating income will increase by 420%, with no increase in average operating assets. What would be the company's ROI?(Round interim calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Return on investment (ROI) =
%

Requirement 3:
The Chief Financial Officer of the company believes a more realistic scenario would be a $2 million increase in sales, requiring an $780,000 increase in average operating assets, with a resulting $190,000 increase in net operating income. What would be the company's ROI in this scenario? (Round interim calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)

Return on investment (ROI)
%

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Exercise 12-14 Effects of Changes in Sales, Expenses, and Assets on ROI [LO2]
BusServ.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Sales $ 7,900,000
Net operating income $ 780,000
Average operating assets $ 2,500,000
________________________________________
Consider each of the following requirements independently.

Requirement 1:
Compute the company's return on investment (ROI). (Round interim calculations and final answers to 2 ...

Solution Summary

This provides the steps to calculate the Return on investment (ROI)

$2.19