Complete the following table showing the relationship between sales and return o
ID: 2458905 • Letter: C
Question
Complete the following table showing the relationship between sales and return on investment (ROI):
1.
Complete the following table showing the relationship between sales and return on investment (ROI):
Images.com is a small Internet retailer of high-quality posters The company has $760,000 in operating assets and fixed expenses of $165,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4.9 million per year. The company's contribution margin ratio is 10%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 10 cents Required 1. Complete the following table showing the relationship between sales and return on investment (ROI): (Round your percentage answers to 2 decimal places.) Sales $4,400,000 $ 4,500,000 $ 4,600,000 4,700,000 $ 4,800,000 $ 4,900,000 Net Operating Operating $275,000 760,000 760,000 760,000 760,000 760,000 760,000 ROI 2 What happens to the company's return on investment (ROI) as sales increase? (Round your answer to 2 decimal places.) ROI (Click to select)
Explanation / Answer
As sales increase return on investment increases by 1.32% (37.50%-36.18%)
Sales Net operating income Average operating assets ROI $4400000 $275000 $760000 36.18% $4500000 $285000 ($4500000*10%-165000) $760000 37.50% $4600000 $295000 $760000 38.82% $4700000 $305000 $760000 40.13% $4800000 $315000 $760000 41.44% $4900000 $325000 $760000 42.76%