Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI)
Forchen, Inc., provided the following information for two of its divisions for last year:
| | Small Appliances Division | Cleaning Products Division |
| Sales | $41,604,000 | $34,800,000 |
| Operating income | 3,328,320 | 1,044,000 |
| Operating assets, January 1 | 6,394,000 | 5,600,000 |
| Operating assets, December 31 | 7,474,000 | 6,000,000 |
Required:
1. For the Small Appliances Division, calculate:
| a. Average operating assets | $ fill in the blank 1 | |
| b. Margin | fill in the blank 2 | % |
| c. Turnover | fill in the blank 3 | |
| d. Return on investment (ROI) | fill in the blank 4 | % |
2. For the Cleaning Products Division, calculate:
| a. Average operating assets | $ fill in the blank 5 | |
| b. Margin | fill in the blank 6 | % |
| c. Turnover | fill in the blank 7 | |
| d. Return on investment (ROI) | fill in the blank 8 | % |
3. What if operating income for the Small Appliances Division was $2,080,200? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios. When required, round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35. Enter "0", where ever required.
| Average operating assets | HigherLowerUnaffected | by fill in the blank 10% |
| Margin | HigherLowerUnaffected | by fill in the blank 12% |
| Turnover | HigherLowerUnaffected | by fill in the blank 14% |
| Return on investment (ROI) | HigherLowerUnaffected | by fill in the blank 16% |
