The following information is available for Sweet Dreams Company:
$$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 100,000 \
\hline \text { Operating expenses } & \$ 94,000 \
\hline \text { Operating assets } & \$ 40,000 \
\hline \text { Stockholder's equity } & \$ 25,000 \
\hline \text { Cost of capital } & 10 \% \
\hline
\end{array}$$What is Sweet Dreams Company's return on investment (ROI)?
A) 6.0%.
B) 10.0%.
C) 15.0%.
D) 24.0%.

Question

The following information is available for Sweet Dreams Company: 
$$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 100,000 \
\hline \text { Operating expenses } & \$ 94,000 \
\hline \text { Operating assets } & \$ 40,000 \
\hline \text { Stockholder's equity } & \$ 25,000 \
\hline \text { Cost of capital } & 10 \% \
\hline
\end{array}$$What is Sweet Dreams Company's return on investment (ROI)?
A) 6.0%.
B) 10.0%.
C) 15.0%.
D) 24.0%.

Quizplus · Accepted Answer

ROI is calculated as (Net Income / Operating Assets). Net Income is Sales - Operating Expenses = $100,000 - $94,000 = $6,000. ROI = $6,000 / $40,000 = 0.15 or 15.0%.

The Following Information Is Available for Sweet Dreams Company What Is Sweet Dreams Company's Return on Investment (ROI)? A)

The Following Information Is Available for Sweet Dreams Company What Is Sweet Dreams Company's Return on Investment (ROI)?
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