Response to the following problem:
Consider the following information for Vulcan Stores for 2005 and 2006.
2005 2006
Total assets $ 80,000,000 $ 90,000,000
Noninterest - bearing current liabilities 7,000,000 8,000,000
Net Income 6,000,000 8,000,000
Interest Expense 4,000,000 5,000,000
Sales 120,000,000 180,000,000
Tax rate 35% 35%
Required:
a. Compute ROI for both years.
b. Break ROI down into profit margin and investment turnover.
c. Comment on the change in financial performance between 2005 and 2006.