Flash Corporation has operating income of $180,000,a sales margin of 15%,and capital turnover of 2.0.The return on investment (ROI)for Flash Corporation would be closest to:
A)8%.
B)2%.
C)30%.
D)125%.

Question

Quizplus · Accepted Answer

ROI= Operating Income/Invested Capital

Sales = Operating Income/Sales Margin
Therefore, Sales = $1,200,000

Capital Employed (Invested Capital) = Sales/Capital Turnover = $600,000

ROI= Operating Income/Capital Employed = $180,000 / $600,000 = 0.3 = 30%

Flash Corporation Has Operating Income of $180,000,a Sales Margin of 15%,and