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CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:Sales $3,000,000Net operating income $150,000Average operating assets $750,000Consider each of the following requirements independently.Requirement 1:Compute the company's return on investment (ROI).Return on investment % ?Requirement 2:The entrepreneur who founded the company is convinced that sales will increase next year by 50% and that net operating income will increase by 200%, with no increase in average operating assets. What would be the company's ROI?Return on investment % ?Requirement 3:The chief financial officer of the company believes a more realistic scenario would be a $1,000,000 increase in sales, requiring an $250,000 increase in average operating assets, with a resulting $200,000 increase in net operating income. What would be the company's ROI in this scenario?Return on investment %?

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Kolawole845

Answer:

1) ROI= 20%

2) ROI=15%

3) ROI = 35%

Explanation:

ROI is the proportion of capital invested that is earned as net operating income. It calculated as

Return on Investment = Net income/Average operating asset

                                 = 150,000/750,000 × 100 = 20%

2.

ROI with a 50% increase in sales and 200% increase in average assets

ROI = (150%× 150,000)/(200%× 750,000)× 100= 15%

3.

ROI wth a 1,000,000 increase in sales

ROI = ( 150,000+200,000)/(250,000+ 750,000)× 100=35%

Answer

1) ROI= 20%

2) ROI=15%

3) ROI = 35%

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