The Reed Division reports the following operating data for the past two years: The return on investment at Reed was exactly the same in Year 1 and Year 2.
-The margin in Year 2 was:
A)48%
B)32%
C)20%
D)10%

Question

The Reed Division reports the following operating data for the past two years: The return on investment at Reed was exactly the same in Year 1 and Year 2.
-The margin in Year 2 was:
A)48% 
B)32% 
C)20% 
D)10%

Quizplus · Accepted Answer

ROI in Year 1:
ROI = Margin F1F1F1S1F1F1F10 Turnover = 16% F1F1F1S1F1F1F10 2.5 = 40%
By assumption,the ROI is the same in Year 2 as in Year 1.Therefore,in Year 2:
ROI = Margin F1F1F1S1F1F1F10 Turnover
40% = Margin F1F1F1S1F1F1F10 2
Margin = 40% F1F1F1S1F1F1F10 2 = 20%

The Reed Division Reports the Following Operating Data for the Past