The income statement for Forklift Electrical Ltd for two years are shown below: Forklift Electrical Ltd Income Statement Comparison Current year Prior Year (amounts in thousands) $ 33,750 21,938 $ 11,812 $ 24,750 16,830 $ 7,920 Sales Cost of goods sold Gross profit Wages $ 8,775 $ 6,188 Utilities 675 250 Repairs Selling Total expenses 169 325 506 200 $ 10,125 $ 6,963 Total assets (investment base) $ 4,500 $ 1,500 Required: a) Determine the operating income (loss) (dollars) for each year. b) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the amounts of the total assets as the investment base, calculate the return on investment. c) Was the decision to invest additional assets in the company successful? Explain.

The income statement for Forklift Electrical Ltd for two years are shown below: Forklift Electrical Ltd Income Statement Comparison Current year Prior Year (amounts in thousands) $ 33,750 21,938 $ 11,812 $ 24,750 16,830 $ 7,920 Sales Cost of goods sold Gross profit Wages $ 8,775 $ 6,188 Utilities 675 250 Repairs Selling Total expenses 169 325 506 200 $ 10,125 $ 6,963 Total assets (investment base) $ 4,500 $ 1,500 Required: a) Determine the operating income (loss) (dollars) for each year. b) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the amounts of the total assets as the investment base, calculate the return on investment. c) Was the decision to invest additional assets in the company successful? Explain.

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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