Maryoge, ne, sa manufacturing fim that has expernenced strong compettion in es t
ID: 2328893 • Letter: M
Question
Maryoge, ne, sa manufacturing fim that has expernenced strong compettion in es tradtional business, Management is considering joining the trend to the tservice sconomy by el nating its manufacturing operations and concentrt on ro ding specialzed maintenance services to ther manufacturers Management of Manyops, Inc has had a target 16% on an asset base that has avenged S7 millon. To ache or so, average otal asset u over oa was re um ,the co pany shifts its operato som manu stung to providing maintenance services, t is estimated that average total assets will decrease to $2 million. Required: a. Calculate net income, margin, and sales required for Manyops, Inc., to achieve its target ROl as a manufacturing fim. (Enter "Sales" and "Net Income" answers in millions (.e 10,000,000 should be entered as 10). Round "Net Income" 2 declmal places.) Net income Margin Sales milion b. Assume that the average margin of mantenance service firms is 25%, and r at the average Rol br such rms is also 18%. Calculate ner et ncome sales and bbl asset turnover rat Mar yops in wil have i the change to services is made and the f m is able to earn an average mar n and achieve an 18% ROL Enter Sales-and Net income answers in minions (l.., 10,000,000 should be entered as 10). Round your answers to 2 decimal places) Net income Sales Tumover milion millionExplanation / Answer
a) Caluclate net Income, margin and sales required for Manyops Inc. to achieve its target ROI as a Manufacturing firm. Average total assets 7 million Target ROI 18% Net Income (Average total assets x Target ROI) 1.26 million Average total assets 7 million Assets turnover 3 Sales (Average total assets x Assets turnover) 21 million Net Income 1.26 million Sales 21 million Margin 6.00% b) Assume that the average margin of Maintenance service firm is 2.5%, and that the average ROI for such firm is also 18%. Calculate the net Income, sales, and total asset turnover that Manyops Inc. will have if the change to service is made and firm is able to earn an average margin and achieve 18% ROI. Average total assets 2 million Target ROI 18% Net Income (Average total assets x Target ROI) 0.36 million Net Income 0.36 million Margin 2.50% Sales (Net Income / Margin) 14.4 million Sales 14.4 million Average total assets 2 million Assets turnover 7.2 Note: Part c, d and e are not from the above information of Manyops Inc. Please submit it in a new request with relevant information.