Asked by Adrian Barrera on May 14, 2024
Verified
The profit margin for Division C is 6%, and the investment turnover is 1.2. What is the return on investment for Division C?
A) 20%
B) 6.7%
C) 7.3%
D) 7.2%
Investment Turnover
A measure of a company's efficiency in using its assets to generate sales revenue; it calculates how quickly investments are converted into income.
Profit Margin
A financial ratio indicating the percentage of revenue that remains as profit after all expenses are deducted.
- Acquire knowledge of the parts and mathematical operations used in the DuPont method for determining Return on Investment.
Verified Answer
BC
Bella CalomardeMay 18, 2024
Final Answer :
D
Explanation :
Return on investment (ROI) formula is:
ROI = profit margin x investment turnover
Given that profit margin is 6% and investment turnover is 1.2, we can simply substitute in the formula as follows:
ROI = 6% x 1.2
ROI = 7.2%
Therefore, the answer is choice D - 7.2% as it is the only option that matches the calculation.
ROI = profit margin x investment turnover
Given that profit margin is 6% and investment turnover is 1.2, we can simply substitute in the formula as follows:
ROI = 6% x 1.2
ROI = 7.2%
Therefore, the answer is choice D - 7.2% as it is the only option that matches the calculation.
Learning Objectives
- Acquire knowledge of the parts and mathematical operations used in the DuPont method for determining Return on Investment.
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