What are the total assets reported by Panther Enterprises if operating income is $252,750, its return on investment (ROI)is 15%, and its target rate of return is 5%?
A)$37,912.5
B)$1,685,000
C)$5,055,000
D)$252,750

Question

Quizplus · Accepted Answer

Return on Investment (ROI) = Operating Income / Total Assets
Hence, Total Assets = Operating Income / ROI
Total Assets = $252,750 / 15% = $1,685,000
Target Rate of Return = 5%
Since the ROI is greater than the target rate of return, it indicates that the company is earning more than what it needs to, to cover its costs of capital. Hence, it is a profitable venture and the total assets reported by Panther Enterprises is $1,685,000.

What Are the Total Assets Reported by Panther Enterprises If