Sales $ 3,400,000 Net operating income $ 272,000 Average operating assets $ 850,000 The following questions are to be considered independently. Garrison 16e Rechecks 2019-01-10 2. The entrepreneur who founded the company is convinced that sales will increase next year by 60% and that net operating income will increase by 210%, with no increase in a

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The entrepreneur who founded the company is convinced that sales will increase next year by 60% and that net operating income will increase by 210 %, with no increase in average operating assets. What would be the company’s ROI? 3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,100,000 increase in sales, requiring a $275,000 increase in average operating assets, with a resulting $107,800 increase in net operating income. What would be the company’s ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

ROI is 99.20%

ROI is 33.76%

Explanation:

ROI under the first scenario;

Return on Investment(ROI)=net income/average operating assets*100

sales forecast $3,400,000*(1+60%)=$5,440,000.00  

net operating income  forecast $272,000*(1+210%)=$843,200

average operating assets is $850,000

forecast ROI=$843,200.00/*$850,000*100

 forecast ROI=99.2%

ROI under the second scenario:

sales forecast($3,400,00+$1,100,000)=$4,500,000

net operating income forecast ($272,000+$107,800)=$379,800

average operating assets ($850,000+$275,000)=$1,125,000

forecast ROI=$379,800/$1,125,000

                    =33.76%

8 million dollars more

Explanation:

From the chart as uploaded from online search,

In 2009, Calimart made 26 million dollars

in 2008, Calimart made 18 million dollars

In 2009 he made (26 million minus 18 million) more than in 2008

=26 -18

=8 million dollars more