ZNet Co. is a web-based retail company. The company reports the following for the past year. Sales $ 5,000,000 Operating income 1,000,000 Average invested assets 12,500,000 The company’s CEO believes that sales for next year will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for the past year. 1. Compute return on investment for the past year. 2. Compute profit margin for the past year. 3. If the CEO’s forecast is correct, what will return on investment equal for next year? 4. If the CEO’s forecast is correct, what will investment turnover equal for next year?
ZNet Co. is a web-based retail company. The company reports the following for the past year. Sales $ 5,000,000 Operating income 1,000,000 Average invested assets 12,500,000 The company’s CEO believes that sales for next year will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for the past year. 1. Compute return on investment for the past year. 2. Compute profit margin for the past year. 3. If the CEO’s forecast is correct, what will return on investment equal for next year? 4. If the CEO’s forecast is correct, what will investment turnover equal for next year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Exercise 22-15 Return on investment LO A1, A2
ZNet Co. is a web-based retail company. The company reports the following for the past year.
| Sales | $ | 5,000,000 | |
| Operating income | 1,000,000 | ||
| Average invested assets | 12,500,000 | ||
The company’s CEO believes that sales for next year will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for the past year.
1. Compute return on investment for the past year.
2. Compute profit margin for the past year.
3. If the CEO’s
4. If the CEO’s forecast is correct, what will investment turnover equal for next year?
Transcribed Image Text:**Exercise 22-15: Return on Investment LO A1, A2**
ZNet Co. is a web-based retail company. The company reports the following for the past year:
- **Sales:** $5,000,000
- **Operating income:** $1,000,000
- **Average invested assets:** $12,500,000
The company’s CEO believes that sales for next year will increase by 20% and both the profit margin (%) and the level of average invested assets will remain the same as for the past year.
### Tasks
1. **Compute return on investment for the past year.**
2. **Compute profit margin for the past year.**
3. **If the CEO’s forecast is correct, what will return on investment equal for next year?**
4. **If the CEO’s forecast is correct, what will investment turnover equal for next year?**
**Instructions:** Complete this question by entering your answers in the tabs below.
- **Return on Investment:**
- Choose the numerator and denominator to calculate the return on investment.
The task is structured with tabbed sections labeled Required 1 to Required 4 for completing each part. The interface encourages step-by-step completion of calculations, starting with computing the return on investment for the past year. To facilitate the computation, a small table allows input for numerators and denominators to derive the return on investment.
Please enter your answers sequentially as you analyze and compute each part of the exercise.
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