Answered: Elway Company provided the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Elway Company provided the following income statement for the last year:

Sales	$714,390,000
Less: Variable expenses	557,689,000
Contribution margin	$156,701,000
Less: Fixed expenses	195,362,000
Operating income	$-38,661,000

At the beginning of last year, Elway had $38,657,000 in operating assets. At the end of the year, Elway had $41,360,000 in operating assets.

Required:

1. Compute average operating assets.
$fill in the blank 1

2. Compute the margin (as a percent) and turnover ratios for last year. If required, round your answers to two decimal places.

Margin	fill in the blank 2 %
Turnover	fill in the blank 3

3. Compute ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places.
fill in the blank 4 %

4. ROI measures a company’s ability to generate

relative to its investment in assets. The greater the ROI, the

efficiently the company is generating from its assets.

5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).

Elway Company might be a service organization with relatively few physical assets required to generate its sales revenue and income. ROI will be higher when the factors that create a company’s sales or income are not formally recognized as assets (e.g. human talent).
Elway Company might be a service organization with relatively few physical assets required and generates an income much higher than any manufacturing organization. ROI will be higher when the factors that create a company’s sales or income are not formally recognized as assets (e.g. human talent).
Elway Company might be a service organization with relatively few physical assets required and generates an income much higher than any manufacturing organization. ROI will be higher when the factors that create a company’s sales or income are not formally recognized as assets (e.g. goodwill).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions