
a.
Calculate the profit margin of Corporation S.
a.

Explanation of Solution
Operating profit margin: This ratio gauges the operating profitability by quantifying the amount of income earned from business operations from the sales generated.
Formula of operating profit margin:
Calculate the profit margin of Corporation S, if operating income is $16,000 and sales is $320,000.
Thus, the profit margin of Corporation S is 5%.
b.
Calculate the turnover of Corporation S.
b.

Explanation of Solution
Investment turnover: This ratio gauges the operating efficiency by quantifying the amount of sales generated from the assets invested.
Formula of investment turnover:
Calculate the turnover of Corporation S, if operating assets is $200,000 and sales is $320,000.
Thus, the turnover of Corporation S is 1.6 times.
c.
Calculate the
c.

Explanation of Solution
Calculate the ROI of Corporation S, if operating income is $16,000, and operating assets are $200,000.
Thus, the ROI of Corporation S is 8%.
d-1.
Calculate the ROI of Corporation S, if operating income increases to $18,000, and sales increases to $360,000.
d-1.

Explanation of Solution
Formula of ROI according to DuPont formula:
Calculate the ROI of Corporation S, if operating income increases to $18,000, sales increases to $360,000, and operating assets remain at $200,000.
Thus, ROI of Corporation S is 9%.
2.
Calculate the ROI of Corporation S, if operating income increases to $16,800.
2.

Explanation of Solution
Calculate the ROI of Corporation S, if operating income increases to $16,800, sales remain at $320,000, and operating assets remain at $200,000.
Thus, ROI of Corporation S is 8.4%.
3.
Calculate the ROI of Corporation S, if operating assets decreases to $160,000.
3.

Explanation of Solution
Calculate the ROI of Corporation S, if operating assets decreases to $160,000, sales remain at $320,000, and operating income remains at $16,000.
Thus, ROI of Corporation S is 10%.
Want to see more full solutions like this?
Chapter 9 Solutions
Fundamental Managerial Accounting Concepts
- Critically analyse the role of financial reporting in investment decision-making,emphasizing the qualitative characteristics that enhance the usefulness of financialstatements. Discuss how financial reporting influences both investor confidence andregulatory decisions, using relevant examples.arrow_forwardHelp need!!arrow_forwardAnswer please correarrow_forward
- Answer should be coarrow_forwardSolve quiarrow_forwardAssess the role of modern accounting theories in guiding research in accounting.Discuss how contemporary theories, such as stakeholder theory, legitimacy theory, andbehavioral accounting theory, shape research questions, hypotheses formulation, andempirical analysis.arrow_forward
- Need answerarrow_forwardDefine research methodology in the context of accounting theory and discuss theimportance of selecting appropriate research methodology. Evaluate the strengths andlimitations of quantitative and qualitative approaches in accounting research.arrow_forwardCritically evaluate the progress and challenges in achieving a single set of globalaccounting standards. Discuss the benefits and drawbacks of globalization inaccounting, providing relevant examples.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





