Question : 41. A company has computed that their “asset turnover” 3. Which : 1295682

41. A company has computed that their “asset turnover” is 3. Which of the following statements is the best interpretation of these results? A. For every $3 of sales, $1 of net profit is generated.B. For every $3 invested in assets, $1 in net profit is generated.C. For every $1 invested in assets, $3 in sales are generated.D. For every $3 invested in assets, $1 in sales are generated.

42. When defining net operating income for return on investment (ROI) purposes, which of the following items should not be included? A. Sales revenueB. Cost of goods soldC. Interest expenseD. Salaries expense

43. Hardcastle Ltd. had sales of $3,000,000 and net operating income of $800,000. Operating assets during the year averaged $1,500,000. The manager of Hardcastle is considering the purchase of a new machine which is expected to increase average operating assets by 5%. If the new machine is purchased, the company’s new return on investment (ROI) would be: A. 190.5%B. 52.5%C. 196.9%D. 50.8%

44. Bryan Manufacturing had sales of $4,000,000 and net operating income of $700,000. Operating assets during the year averaged $600,000. The manager of Hardcastle is considering the purchase of a new machine which is expected to increase average operating assets by 8%. If the new machine is purchased, the company’s new return on investment (ROI) would be: A. 126.0%B. 16.2%C. 108.0%D. 92.6%

45. For the current year, Winston Inc. reported sales of $800,000 and an asset turnover of 2. The rate of return on average invested assets was 20%. The company’s margin for the year was: A. 10%B. 40%C. 25%D. 50%

46. Carson Inc. had the following information available at the end of its current year: 

Sales

$2,000,000

Net operating income

500,000

Average operating assets

1,200,000

Refer to the Carson Inc. information above. What was Carson’s return on investment (ROI) for the year? A. 2.4%B. 41.7%C. 25.0%D. 166.7%

47. Carson Inc. had the following information available at the end of its current year: 

Sales

$2,000,000

Net operating income

500,000

Average operating assets

1,200,000

Refer to the Carson Inc. information above. What was Carson’s margin for the year? A. 2.4%B. 41.7%C. 25.0%D. 166.7%

48. Carson Inc. had the following information available at the end of its current year: 

Sales

$2,000,000

Net operating income

500,000

Average operating assets

1,200,000

Refer to the Carson Inc. information above. What was Carson’s asset turnover for the year? A. 2.4 B. .417C. .25 D. 1.7

49. Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25%. Over the past several years, one of Astin’s divisions has consistently had the following information: 

Sales

$2,000,000

Net operating income

500,000

In order to achieve the company’s ROI goals, this division should do which of the following? A. Maintain average operating assets of $2,000,000 or more.B. Maintain average operating assets of $2,000,000 or less.C. Maintain average operating assets of $125,000 or more.D. Maintain average operating assets of $125,000 or less.

50. All else being equal, which of the following items would increase a company’s return on investment (ROI)? A. A decrease in net income.B. An increase in fixed costs.C. A decrease in average operating assets.D. A decrease in sales volume.