Firm J has net income of $76,260, sales of $930,000, and average total assets of

Question

Firm J has net income of $76,260, sales of $930,000, and average total assets of $372,000. Required: Calculate Firm J’s margin, turnover, and return on investment (ROI). Find ROI in dollars, not %

Margin Choose Numerator: / Choose Denominator: = Margin Net income / Sales = Margin $76,260 / $930,000 = 8.2% Turnover Choose Numerator: / Choose Denominator: = Turnover Sales / Average total assets = Turnover $930,000 / $372,000 = 2.5 Return on Investment Choose Numerator: / Choose Denominator: = Return on Investment / = Return on Investment $0 / = 0

Explanation / Answer

I and II Correct.

Answer to III. ( Calculation of Return on Investment )

Choose Numerator / Choose Denominator = Return on Investment

Net Income / Average Total Assets = Return on Investment

$ 76,260 / $ 372,000

= 0.205 that is 20.50%

Return on Investment = 20.50%

in dollars = 20.5% * 372,000 = $ 76,260

Therefore, Return on Investment = $ 76,260

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