Largo Company recorded for the past year sales of $730,000 and average operating assets of $292,000. What is the margin that Largo Company needed to earn in order to achieve an return on investment (ROI) of 32.5%?
A) 32.50%
B) 2.50%
C) 3.08%
D) 13.00%

Question

Quizplus · Accepted Answer

To achieve an ROI of 32.5%, the margin is calculated as (ROI / Sales) * Average Operating Assets. Thus, (0.325 * $292,000) / $730,000 = 0.13 or 13.00%.

Largo Company Recorded for the Past Year Sales of $730,000