Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 proposes that you increase inventories by 25 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 $ 2,000,000 $ 1,500,000 Current Values Proposed Impact of Inventory Increase 25% (improvement) 0% $ 300,000 10% - reduction Fixed expenses $ 100,000 15% (increase) Inventory $ 300,000 25% + Accounts receivable $ 100,000 0% Other current assets $ 500,000 0% Fixed assets 400,000 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.) Category Current Values New Values Sales $ 2,000,000 $ 2,000,258 Cost of goods sold $ 1,500,000 Variable expenses $ 300,000 $ 299,892 Fixed expenses $ 100,000 Inventory $ 300,000 Accounts receivable $ 100,000 SSS $ 100,158 $ 300,258 $ 100,008 Other current assets $ 500,000 Fixed assets $ 400,000 ROA % %

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 proposes that you increase inventories by 25 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 $ 2,000,000 $ 1,500,000 Current Values Proposed Impact of Inventory Increase 25% (improvement) 0% $ 300,000 10% - reduction Fixed expenses $ 100,000 15% (increase) Inventory $ 300,000 25% + Accounts receivable $ 100,000 0% Other current assets $ 500,000 0% Fixed assets 400,000 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.) Category Current Values New Values Sales $ 2,000,000 $ 2,000,258 Cost of goods sold $ 1,500,000 Variable expenses $ 300,000 $ 299,892 Fixed expenses $ 100,000 Inventory $ 300,000 Accounts receivable $ 100,000 SSS $ 100,158 $ 300,258 $ 100,008 Other current assets $ 500,000 Fixed assets $ 400,000 ROA % %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Do not give solution in image 

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 proposes that you increase inventories by 25 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 $ 2,000,000 $ 1,500,000 Current Values Proposed Impact of Inventory Increase 25% (improvement) 0% $ 300,000 10% - reduction Fixed expenses $ 100,000 15% (increase) Inventory $ 300,000 25% + Accounts receivable $ 100,000 0% Other current assets $ 500,000 0% Fixed assets 400,000 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.) Category Current Values New Values Sales $ 2,000,000 $ 2,000,258 Cost of goods sold $ 1,500,000 Variable expenses $ 300,000 $ 299,892 Fixed expenses $ 100,000 Inventory $ 300,000 Accounts receivable $ 100,000 SSS $ 100,158 $ 300,258 $ 100,008 Other current assets $ 500,000 Fixed assets $ 400,000 ROA % %
Transcribed Image Text: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 proposes that you increase inventories by 25 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 $ 2,000,000 $ 1,500,000 Current Values Proposed Impact of Inventory Increase 25% (improvement) 0% $ 300,000 10% - reduction Fixed expenses $ 100,000 15% (increase) Inventory $ 300,000 25% + Accounts receivable $ 100,000 0% Other current assets $ 500,000 0% Fixed assets 400,000 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.) Category Current Values New Values Sales $ 2,000,000 $ 2,000,258 Cost of goods sold $ 1,500,000 Variable expenses $ 300,000 $ 299,892 Fixed expenses $ 100,000 Inventory $ 300,000 Accounts receivable $ 100,000 SSS $ 100,158 $ 300,258 $ 100,008 Other current assets $ 500,000 Fixed assets $ 400,000 ROA % %
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS