Hancock Corporation has a capital turnover of 2, sales of $500,000, and a return on investment of 4%. What was Hancock's operating income??

Question

Quizplus · Accepted Answer

Operating income can be found by multiplying the return on investment (ROI) by the total assets. ROI is given as 4%, and since capital turnover is sales divided by total assets, total assets are $500,000 / 2 = $250,000. Therefore, operating income is 4% of $250,000, which is $10,000.

Hancock Corporation Has a Capital Turnover of 2, Sales of $500,000