Question - KAM Co. reports the following information for its most recent year:
Sales $2,000,000
Net operating income $180,000
Average operating assets $700,000
Required: show your work
1) Compute the company's margin.
2) Compute the company's turnover.
3) Compute the company's return on investment (ROI).
4) The company predicts that for next year, there will be a $500,000 increase in sales, resulting in $200,000 increase in net operating income. But average operating assets will also increase by 200,000. What would be the company's predicted ROI for next year?
5) What can you say about management's performance if the predicted ROI for next year turns out to be true?