Asked by Nicholas Lalla on Jul 25, 2024
Verified
BR Company has a contribution margin of 9%. Sales are $477,000, net operating income is $42,930, and average operating assets are $134,000. What is the company's return on investment (ROI) ?
A) 3.6%
B) 9.0%
C) 32.0%
D) 0.3%
Return On Investment (ROI)
A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.
Net Operating Income
This refers to the profit realized from a business's operational activities, excluding taxes and interest.
- Develop an understanding of the metrics involved in operational performance, such as net operating income, margin, turnover, and the calculation of return on investment.
Verified Answer
DJ
Daniel JulesJul 31, 2024
Final Answer :
C
Explanation :
The formula for ROI is (Net Operating Income / Average Operating Assets) x 100.
Substituting the given values, we get, ROI = (42,930 / 134,000) x 100 = 32%. Therefore, the correct answer is option C.
Substituting the given values, we get, ROI = (42,930 / 134,000) x 100 = 32%. Therefore, the correct answer is option C.
Learning Objectives
- Develop an understanding of the metrics involved in operational performance, such as net operating income, margin, turnover, and the calculation of return on investment.
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