The Following Data Pertain to Coronation Computer Sales for 2012

question 31

Essay

The following data pertain to Coronation Computer Sales for 2012: $\begin{array} { l r } \text { Sales Revenue } & \$ 2,000,000 \\\text { Cost of goods sold } & 1,650,000 \\\text { Operating expenses } & 300,000 \\\text { Average invested capital } & 500,000\end{array}$ Required:
A. Calculate the company's sales margin, capital turnover, and ROI for 2012.
B. If the sales and average invested capital remain the same, to what level would total costs and expenses have to be reduced in 2013 to achieve a 10% ROI?
C. Assume that costs and expenses are reduced, as calculated in requirement "B." Calculate the firm's new sales margin.
D. Suggest two possible actions that will improve the company's capital turnover.

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Definitions:

Motor Vehicles

Wheeled vehicles that are motorized or mechanically propelled, used for transportation of people, goods, or both.

Household Electricity

Electrical power supplied to homes, used for operating appliances, lighting, and other domestic purposes.

Elastic

In economics, it describes a situation where the supply or demand for a good or service changes significantly when its price changes. High elasticity indicates that a slight price change could lead to a significant change in quantity demanded or supplied.

Percentage Change

A mathematical calculation that represents the degree of change over time, expressed as a percentage, to compare changes in quantities or measures.