Forchen, Inc., provided the following information for two of its divisions for last year: |...
Question:
Forchen, Inc., provided the following information for two of its divisions for last year:
| Small Appliances Division | Cleaning Products Division | |
| Sales | 34,670,000 | 31,320,000 |
| Operating income | 2,773,600 | 1,252,800 |
| Operating assets, January 1 | 6,394,000 | 5,600,000 |
| Operating assets, December 31 | 7,474,000 | 6,000,000 |
1. For the Small Appliances Division, calculate:
| a. Average operating assets |
| b. Margin |
| c. Turnover |
| d. ROI |
2. For the Cleaning Products Division, calculate:
| a. Average operating assets |
| b. Margin |
| c. Turnover |
| d. ROI |
3. What if operating income for the Small Appliances Division was $2,000,000? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios.
Asset turnover:
The asset turnover is a financial ratio that measures how well the company's assets generates revenues. The higher the asset turnover the better or the more efficient the company is. Asset turnover differs by industries since there are some industries that have lower asset base but generate a lot of revenues such as retail industries. These industries tend to have higher asset turnover while there are industries that have low turnover such as real estate industries.
Answer and Explanation: 1
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View this answer1. For the Small Appliances Division, calculate:
| a. Average operating assets | $6,934,000 |
- Average operating assets = (Operating assets, January 1 +...
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