Return on Investment Question:
Soto corporation's balance sheet indicates that the company has $300,000 invested in operating assets. During 2011, Soto earned operating income of $45,000 on $600,000 of sales.
a. Compute Soto's return on investment for 2011
b. Re-compute Soto's ROI under each of the following independent assumptions.
1. Sales increase from $600,000 to $750,000 thereby resulting in an increase in operating income from $45,000 to $60,000
2. Sales remain constant, but Soto reduces expenses resulting in an increase in an operating income from $45,000 to $48,000
3. Soto is able to reduce its invested capital from $300,000 to $240,000 without affecting operating income.