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Exercise 11-11 (30 minutes)
1.
Net operating income
Margin = Sales
$70,000
= = 5%
$1,400,000
Sales
Turnover = Average operating assets
$1,400,000
= = 4
$350,000
ROI = Margin × Turnover
= 5% × 4 = 20%
2.
Net operating income
Margin = Sales
$70,000 + $18,200
=
$1,400,000 + $70,000
$88,200
= = 6%
$1,470,000
Sales
Turnover = Average operating assets
