Pierre's Ice Cream Company produces ultra-rich ice cream,which it sells in Cleveland,Ohio,and other neighboring places.Last year,its actual return on investment exceeded its target return on investment (ROI)for that fiscal year.The following results were found on its financial statements: Gross revenues: $250,000 Total assets: $500,000 Gross profits: $100,000 Total liabilities: $200,000 Net profits after tax: $ 50,000 Owner's equity: $300,000 What was the actual ROI for Pierre's Ice Cream Company?

Question

Quizplus · Accepted Answer

The actual ROI is calculated as Net Profits After Tax divided by Owner's Equity. So, $50,000 / $300,000 = 0.1667, which is approximately 16.67 percent. However, none of the options match this exactly, but 10 percent is the closest reasonable choice given the options.

Pierre's Ice Cream Company Produces Ultra-Rich Ice Cream,which It Sells