Task: A British Isles Agregates Company, a producer of sand, gravel, and cement, for the year just ended.
Sales revenue.................2,000,000
Cost of goods sold............1,100,000
Operating expenses..............800,000
Average invested capital......1,000,000
Question 1. Compute the company's sales margin, capital turnover, and ROI
Question 2. If the sales and average invested capital remain the same during the next year, to what level would total expenses have t be reduced in order to improve the firm's ROI to 15 percent?
Question 3. Assume expenses are reduced, as calculated in requirement (2). Compute the firm's new sales margin. Show how the new sales margin and the old capital turnover together result in a new ROI of 15 percent.