Problem 12-6 Consider the following information for HandyCraft Stores for 2014 a

Question

Problem 12-6

Consider the following information for HandyCraft Stores for 2014 and 2015:

30%

Compute ROI for both years. (Round answers to 2 decimal places, e.g. 15.32%.)

%

Break ROI down into profit margin and investment turnover. (Round answers to 4 decimal places, e.g. 15.3215.)

2014 2015 Total assets $59,400,000 $56,200,000 Noninterest-bearing current liabilities 4,490,000 4,950,000 Net income 3,670,000 4,970,000 Interest expense 2,490,000 2,940,000 Sales 66,000,000 96,250,000 Tax rate 30%

30%

Explanation / Answer

ROI = Net Income / Total Assets

Profit margin = Net income / Sales

Investment turnover = Sales / Total Assets

2014 2015 ROI 6.18% 8.84%

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