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Sagot :
Answer:
net increase in sales = $125,000 x (1 - 8% - 3%) = $111,250
net increase in costs = $125,000 x 80% = $100,000
average investment in assets = $125,000 / 6 = $20,833
A. Compute the incremental income after taxes.
- incremental income = $111,250 - $100,000 = $11,250
B. What will Johnson’s incremental return on sales be if these new credit customers are accepted?
- return on sales = $11,250 / $125,000 = 9%
C. If the accounts receivable turnover ratio is 6 to 1, and no other asset buildup is needed to serve the new customers, what will Johnson’s incremental return on new average investment be?
- = $11,250 / $20,833 = 54%
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