Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 5

Margin, Turnover, Return on Investment, Average Operating Assets
Elway Company provided the following income statement for the last year:
At the beginning of last year, Elway had $44,500 in operating assets. At the end of the year, Elway had $33,900 in operating assets.
Required:
1. Compute average operating assets.
2. Compute the margin and turnover ratios for last year.
3. Compute ROI.
4. Conceptual Connection: Briefly explain the meaning of ROI.
5. Conceptual Connection: Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).