17.The following information is available for 2007 for Cybermed Company :
Sales$5,000,000
Expenses2,750,000
Net income2,250,000
Total assets3,125,000
Chris, the president of the company, is considering two alternatives to improve performance in 2007.
Alternative 1:An aggressive advertising campaign would increase sales by 20% and increase expenses 15% with no change in total assets.
Alternative 2:Investment in new plant assets would increase total assets by $1,250,000. Sales are expected to increase by $750,000, and expenses are expected to increase by $700,000.
Required:
a.Calculate profit margin, asset turnover, and return on assets for 2007.
b.Calculate profit margin, asset turnover, and return on assets for each of the two alternatives.
c.Which of the two alternatives would you recommend? Why?
18.The following information is available for Jorge Company:
Sales (in millions)$50
Profit margin0.4
Asset turnover1.25
Required:
a.Calculate return on assets (ROA).
b.Calculate net income.
c.Determine the amount of total assets.