Bottlebrush Company has operating income of $56,580, invested assets of $205,000, and sales of $471,500

Accounting Nov 09, 2020

Bottlebrush Company has operating income of $56,580, invested assets of $205,000, and sales of $471,500.

Use the DuPont formula to compute the return on investment, and show (a) the profit margin, (b) the investment turnover, and (c) the return on investment. Round answers to one decimal place.

Expert Solution

a) Profit margin = Net operating income/Sales

= $56,580/$471,500

= 12%

b) Investment Turnover = Sales/Invested assets

= $471,500/$205,000

= 2.30

c) Return on investment = Margin * Turnover

= 12%*2.3

= 27.60%

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