Tropic corp. has sales revenue of $507,000 resulting in operating income of $61,000. average invested assets total $607,000, and the cost of capital is 6%. calculate the return on investment if sales increase by 10% and the profit margin and invested assets remain the same. (round your intermediate calculations and final answers to 2 decimal places.)

11.03%

Explanation:

Return on investment is a performance measurement tool used to evaluate the financial performance of investments.

The formula for calculating ROI is:

ROI = Net profit/PBIT/Operating profit ÷ cost of investment

Lets first calculate profit margin before the 10% increase in sales. Profit margin is calculated as:

Profit Margin = operating income ÷ sales revenue × 100

PM = 61000 ÷ 507000 × 100

PM = 12.03%

Now lets incorporate the 10% increase in sales in order to see it's effect on profit margin ratio.

Sales revenue after the increase by 10% = 110% × 507000

Sales revenue after the increase by 10% = 557700

According to the question profit margin remains the same but due to increase in sales revenue the operating income will increase too.

Operating income after increase in sales = 12% × 557700

Operating income after increase in sales = 66924

Now we calculate ROI after the increase in sales by 10%.

ROI = 66924 ÷ 607000 × 100

ROI = 11.03%

New sales = 110% x $507,000 = $557,700

New operating income = 110% x $61,000 = $67,100

Return on investment = Operating income/Average invested assets x 100

Return on investment = $67,100/$607,000 x 100

Return on investment =11.05%

Explanation:

Return on investment is the ratio of operating income to average invested assets. In this question, sales increased by 10%. 10% increase in sales increases the operating profit by 10%. Thus, we will divide the operating income by the average invested assets in order to obtain return on equity.

the specific actions take by the fed. what the fed was attempting to do by taking these actions. the result of the actions taken by the fed

answer; commerce clearing house;