Question

Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $41,604,000 $23,200,000 Operating income 3,328,320 696,000 Operating assets, January 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate: $1 a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets $ b. Margin c. Turnover d. Return on investment (ROI) 3. What if operating income for the Small Appliances Division was $2,496,240? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios. When required, round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35. Enter "0", where ever required. Average operating assets by Margin Turnover Return on investment (ROI)

Answer 1

1. a) Small Appliance Division, Average total operating assets = $6,934,000

b) Margin = 8.00%

c) Turnover = 6.00 times

d) ROI = 48.00%

2. a) Cleaning products division, Average total operating assets = $5,800,000

b) Margin = 3.00%

c) Turnover = 4.00 times

d) ROI = 12.00%

3. See explanation section.

Step-by-step explanation:

See the following images to get the proper explanation. As all the answers are round figure, therefore, I did not use 16.00%, instead I used 16%. (16% is an example).