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CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:...

CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:

Sales $ 2,520,000
Net operating income $ 196,560
Average operating assets $ 840,000

The following questions are to be considered independently.

The entrepreneur who founded the company is convinced that sales will increase next year by 40% and that net operating income will increase by 250%, with no increase in average operating assets. What would be the company’s ROI? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Answer #1

For next year,

net operating income = $196560 x 250% = $491400

therefore,

ROI = Net operating income/Average operating assets

= $491400/$840000

= 58.5%

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