Fritwell has an asset turnover of 2.0 and an operating profit margin of 10%. It is launching a new product which is expected to generate additional sales of $1.6 million and additional profit of $120,000. It will require additional assets of $500,000. Assuming there are no other changes to current operations, how will the new product affect these ratios? Operating profit margin ROCE A Decrease Decrease B Decrease Increase C Increase Decrease D Increase Increase
Fritwell has an asset turnover of 2.0 and an operating profit margin of 10%. It is launching a new product which is expected to generate additional sales of $1.6 million and additional profit of $120,000. It will require additional assets of $500,000. Assuming there are no other changes to current operations, how will the new product affect these ratios? Operating profit margin ROCE A Decrease Decrease B Decrease Increase C Increase Decrease D Increase Increase
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Fritwell has an asset turnover of 2.0 and an operating profit margin of 10%. It is launching a new product
which is expected to generate additional sales of $1.6 million and additional profit of $120,000. It will require
additional assets of $500,000.
Assuming there are no other changes to current operations, how will the new product affect these ratios?
Operating profit margin ROCE
A Decrease Decrease
B Decrease Increase
C Increase Decrease
D Increase Increase
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