Answer:
a) 14.1%
b)1.08
c)$1500
Explanation:
Given invested assets = $650,000
Sales = $700,000
operation's income = $99,000
a)Profit margin = net income/revenue × 100%
Net income = operations income = $99000
Total revenue = sales = $700000
Profit margin = $99000/$700000×100%
Profit margin = 14.1%
b) investment turnover is the ratio of the net sales to the sum of equity and debt.
Net sales = $700000
Debt = $650,000 = invested assets
Investment turnover = Net sales/debt
Investment turnover = 700000/650000
Investment turnover = 1.08
c) residual income is the income generated after all debts and expenses has been paid.
Residual income = income from operations - returns of investment
Income from operations =$99000
Return on investment = 15% of $650000 = $97500
Residual income = $99000-$97500
Residual income =$1500
