The Gallop Company has an asset turnover of 3.0 times, using assets of $45,000. The company also has a return on investment (ROI) of 20%. What was Gallop's operating profit margin?
A) 5.0%.
B) 6.0%.
C) 6.7%.
D) 8.3%.

Question

Quizplus · Accepted Answer

The operating profit margin can be calculated using the formula: ROI = Asset Turnover x Operating Profit Margin. Given ROI is 20% and Asset Turnover is 3.0, the Operating Profit Margin = ROI / Asset Turnover = 20% / 3.0 = 6.7%.

The Gallop Company Has an Asset Turnover of 3