Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000. What is the margin that Largo Company needed to earn in order to achieve an return on investment (ROI) of 15%?
A) 2.00%
B) 15.00%
C) 9.99%
D) 7.50%

Question

Quizplus · Accepted Answer

To achieve an ROI of 15%, Largo Company needs to earn $56,250 (15% of $375,000). The margin is calculated as the required earnings divided by sales, which is $56,250 / $750,000 = 7.50%.

Largo Company Recorded for the Past Year Sales of $750,000