Golden Corporation has operating income of $336,000, a sales margin of 16%, and capital turnover of 3.0. The return on investment (ROI)for Golden Corporation would be closest to

Question

Quizplus · Accepted Answer

ROI = Operating Income / Capital Invested
Capital Invested = Operating Income / Sales Margin x Capital Turnover
Plugging in the given figures, we get:
Capital Invested = $336,000 / 0.16 x 3.0 = $6,300,000
ROI = $336,000 / $6,300,000 = 0.053 which is equal to 5.3%
Therefore, the closest answer choice is B) 48%.

Golden Corporation Has Operating Income of $336,000, a Sales Margin