Huang Company reported the following information for the current year: The company's return on investment was: (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
A) 10.00%.
B) 6.25%.
C) 16.00%.
D) Cannot be ascertained from the information provided.

Question

Huang Company reported the following information for the current year:  The company's return on investment was: (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
A) 10.00%. 
B) 6.25%. 
C) 16.00%. 
D) Cannot be ascertained from the information provided.

Quizplus · Accepted Answer

Margin = Operating income ÷ Sales
10% = Operating income ÷ $400,000
Operating income = 10% × $400,000 = $40,000
ROI = Margin × Turnover
ROI = (Operating income ÷ Sales) × (Sales ÷ Operating assets)
ROI = 10% × ($400,000 ÷ $250,000) = 10% × 1.6 = 16.00%

Huang Company Reported the Following Information for the Current Year