Ding Company had operating income of $140,000, sales of $437,500, and turnover of 0.5. What is Ding's ROI?
A) 16%
B) 32%
C) 50%
D) 64%

Question

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated as Operating Income divided by Average Operating Assets. Given the turnover is 0.5, it implies that Sales / Average Operating Assets = 0.5. Therefore, Average Operating Assets = Sales / Turnover = $437,500 / 0.5 = $875,000. ROI = Operating Income / Average Operating Assets = $140,000 / $875,000 = 0.16 or 16%.

Ding Company Had Operating Income of $140,000, Sales of $437,500