Frazier Company's revenues are $300 on invested capital of $240.Expenses are currently 84% of sales.If Frazier Company can reduce its expenses to 70% of sales,return on investment will be ________.

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as (Net Profit / Invested Capital) * 100. Current expenses are 84% of $300, which is $252, so the current net profit is $48. If expenses are reduced to 70% of sales, expenses will be $210, and net profit will be $90. ROI will be ($90 / $240) * 100 = 37.5%.

Frazier Company's Revenues Are $300 on Invested Capital of $240