Question

Management would like to calculate return on investment (ROI) for the current year. The following information is available: Operating assets at the end of the year $6,600,000 Operating assets at the beginning of the year 5,400,000 1,150,000 Sales 550,000 Operating expenses What percentage amount is the RO1? 9% 10% 11% 19%

Answer 1

Sales Less: Operating expense Net income $ 1,150,000 -$ 550,000 $ 600,000 Operating assets, Beginning (A) Operating assets, Ending (B) Average operating assets (A+B)/2 $5,400,000 $6,600,000 $6,000,000 ROI percent = Net income / Average operating assets = $600,000 / $6,000,000 = 0.10 or 10% Answer: 10%