53CategorySalesCost of goods soldAs the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interestingsituation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal innature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing proposesthat you increase inventories by 20 percent (a major investment to you). She has also given the information in the following table. UseFigure 2.3.Variable expensesFixed expensesInventoryAccounts receivableOther current assetsFixed assetsCategorySalesCost of goods soldVariable expensesFixed expensesInventoryCurrent Values$ 5,390,000$ 3,850,000770,000269,500315,000350,000741,000444,000$$Current Values$ 5,390,000S 3.850,000770.000$269,500315.000$Proposed Impact of InventoryIncrease20% + (improvement)0%a.Using the information given, complete the following table and calculate the ROA for current values and new values (Round "ROA" to2 decimal places.)20% reduction10%(increase)20% +New Values0%0%0%Help4Save & Exit 5:472 decimal places.)CategorySalesCost of goods soldVariable expensesFixed expensesInventoryAccounts receivableOther current assetsFixed assetsROACurrent Values5,390,0003,850,000770,000269,500315,000350.000741,000444,000O YesO No$$$$$$$$%New ValuesSavedb. Would the projected change in ROA justify the inventory investment?AHelpware...Save &

ROA stands for the financial term which states Return on Assets and it is the financial ratio which…

As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing propose that you increase inventories by 20 percent (a major investment to you). She has also given the information in the following table. Use Figure 2.3. Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Current Values $ 5,390,000 $ 3,850,000 $ 770,000 269,500 $ $ 315,000 $ 350,000 741,000 $ $ 444,000 Proposed Impact of Inventory Increase 20% + (improvement) 0% 20% - reduction 10% + (increase) 20% + 0% 0% 0% a.Using the information given, complete the following table and calculate the ROA for current values and new values. (Round "ROA" to 2 decimal places.)

As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing propose that you increase inventories by 20 percent (a major investment to you). She has also given the information in the following table. Use Figure 2.3. Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Current Values $ 5,390,000 $ 3,850,000 $ 770,000 269,500 $ $ 315,000 $ 350,000 741,000 $ $ 444,000 Proposed Impact of Inventory Increase 20% + (improvement) 0% 20% - reduction 10% + (increase) 20% + 0% 0% 0% a.Using the information given, complete the following table and calculate the ROA for current values and new values. (Round "ROA" to 2 decimal places.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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