For the current year, Winston Inc. reported sales of $800,000 and an asset turnover of 2. The rate of return on average invested assets was 20%. The company's margin for the year was:
A) 10%
B) 40%
C) 25%
D) 50%

Question

Quizplus · Accepted Answer

The margin is calculated as the profit divided by sales. Given the asset turnover of 2, we can calculate the average invested assets as $800,000 / 2 = $400,000. With a return on average invested assets of 20%, the profit is 20% of $400,000 = $80,000. Therefore, the margin is $80,000 / $800,000 = 10%.

For the Current Year, Winston Inc