The Following Data Pertain to Nedra Company for 20x1 Required:
A

question 91

Essay

The following data pertain to Nedra Company for 20x1: $$\begin{array} { l r } \text { Sales revenue } & \$ 1,000,000 \\\text { Cost of goods sold } & 550,000 \\\text { Operating expenses } & 400,000 \\\text { Average invested capital } & 500,000\end{array}$$
Required:
A. Calculate the company's sales margin, capital turnover, and return on investment for 20x1.
B. If the sales and average invested capital remain the same, to what level would total costs and expenses have to be reduced in 20x2 to achieve a 15% return on investment?
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:

Full Employment

An economic situation in which all available labor resources are being used in the most efficient way possible, often characterized by the absence of cyclical unemployment.

Technology Level

A measure of the degree of sophistication and advancement of a society's tools, techniques, and methods of production.

Instability

The condition of being prone to change or fluctuation, often in a way that is unpredictable or potentially harmful.

Factors Efficiently

refers to the optimal allocation and utilization of resources in production to maximize output without wasting resources.