Goals for Sales and Return on Assets
The president of Blue Moon Corp. is reviewing with her department managers the operating results
of the year just completed. Sales increased by 12% from the previous year to $750,000. Average
total assets for the year were $400,000. Net income, after adding back interest expense, net of
tax, was $60,000.
The president is happy with the performance over the past year but is never satisfied with the
status quo. She has set two specific goals for next year: (1) a 15% growth in sales and (2) a return
on assets of 20%.
To achieve the second goal, the president has stated her intention to increase the total asset
base by 10% over the base for the year just completed.