Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation. Annual sales $24,324,000 Net income 2,975,000 Cost of goods sold 12,600,000 Total assets 10,550,000 Inventory 2,875,000 Receivables 3,445,000 The Midwest Outdoor Equipment Corporation has entered into a new contract with a major supplier of raw materials used in the manufacturing process. Under the new arrangement, called vendor managed inventory, the supplier manages its raw material inventory inside the manufacturer’s plant and bills only the manufacturer when the manufacturer consumes the raw material. This is expected to reduce total assets by $2 million. What is the expected change in return on assets? Note: Round your answer to 2 decimal places.
Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation. Annual sales $24,324,000 Net income 2,975,000 Cost of goods sold 12,600,000 Total assets 10,550,000 Inventory 2,875,000 Receivables 3,445,000 The Midwest Outdoor Equipment Corporation has entered into a new contract with a major supplier of raw materials used in the manufacturing process. Under the new arrangement, called vendor managed inventory, the supplier manages its raw material inventory inside the manufacturer’s plant and bills only the manufacturer when the manufacturer consumes the raw material. This is expected to reduce total assets by $2 million. What is the expected change in return on assets? Note: Round your answer to 2 decimal places.
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 1.6A: Avion, Inc. Susan Dey and Bill Mifflin, procurement managers at Avion, Inc., sat across from each...
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Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation.
| Annual sales | $24,324,000 |
|---|---|
| Net income | 2,975,000 |
| Cost of goods sold | 12,600,000 |
| Total assets | 10,550,000 |
| Inventory | 2,875,000 |
| Receivables | 3,445,000 |
The Midwest Outdoor Equipment Corporation has entered into a new contract with a major supplier of raw materials used in the manufacturing process. Under the new arrangement, called vendor managed inventory, the supplier manages its raw material inventory inside the manufacturer’s plant and bills only the manufacturer when the manufacturer consumes the raw material. This is expected to reduce total assets by $2 million. What is the expected change in return on assets?
Note: Round your answer to 2 decimal places.
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