Asked by Zachariah Andress on May 07, 2024
Verified
If the profit margin for a division is 11% and the investment turnover is 1.5, the return on investment is 7.3%.
Profit Margin
The percentage of revenue that remains as profit after all expenses have been subtracted from sales.
Investment Turnover
Investment turnover measures the rate at which a company or fund buys and sells its portfolio of investments, helping to understand its trading activity level and potential profitability.
- Learn about the components of return on investment (ROI) and how they provide a comprehensive view of divisional performance.
- Analyze the technique and significance of investment turnover in performance analysis.
Verified Answer
KH
Kevin HuangMay 12, 2024
Final Answer :
False
Explanation :
The return on investment (ROI) is calculated by multiplying the profit margin by the investment turnover. Therefore, ROI = 11% * 1.5 = 16.5%.
Learning Objectives
- Learn about the components of return on investment (ROI) and how they provide a comprehensive view of divisional performance.
- Analyze the technique and significance of investment turnover in performance analysis.
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