Question

Aqustin Industries is a division of a major corporation. Data concerning the most recent year appears below Sales $18,150,000 $1,125,300 Net operating income Average operating assets 4,900,000 The division's return on investment (ROI) is closest to:

Answer 1

Answer:

Turnover = Sales / Average Operating Assets
Turnover = $18,150,000 / $4,900,000
Turnover = 3.70 times

Profit Margin = Net Operating Income / Sales * 100
Profit Margin = $1,125,300 / $18,150,000 * 100
Profit Margin = 6.2%

ROI = Turnover * Profit Margin
ROI = 3.70 * 6.2%
ROI = 22.94%