Using the following information, the return on investment is:
$$\begin{array} { l r }
\text { Sales } & \$ 80000 \
\text { Operating profit } & \$ 10000 \
\text { Profit margin } & 10 \% \
\text { Equity } & \$ 40000 \
\text { Minimum required rate of return } & 12 \% \
\text { Turnover of assets } & 1.4 \text { times p.a. }
\end{array}$$

Question

Using the following information, the return on investment is:
$$\begin{array} { l r } 
\text { Sales } & \$ 80000 \
\text { Operating profit } & \$ 10000 \
\text { Profit margin } & 10 \% \
\text { Equity } & \$ 40000 \
\text { Minimum required rate of return } & 12 \% \
\text { Turnover of assets } & 1.4 \text { times p.a. }
\end{array}$$

Quizplus · Accepted Answer

Return on investment (ROI) is calculated as (Operating Profit / Equity) * 100. Here, ROI = ($10,000 / $40,000) * 100 = 25%. However, since the profit margin is 10% and the turnover of assets is 1.4 times, the ROI is 10% * 1.4 = 14%.

Using the Following Information, the Return on Investment Is A) 10% B) 12% C) 14% D) 16

Using the Following Information, the Return on Investment Is A) 10%
B) 12%
C) 14%
D) 16