Company has a number of investment centers to evaluate

Accounting Nov 26, 2020

Company has a number of investment centers to evaluate. If its Investment Center #1 had sales of $1,500,000 and operating income of $600,000 and turnover (also known as “asset turnover”) of 0.48 then how much was its Return on Investment (ROI) rounded to the nearest percent?

Group of answer choices

19 percent

17 percent

20 percent

40 percent

48 percent

Expert Solution

Answer is 19 percent

Average Total Asset = Sales / Asset turnover

= 1500000 / 0.48 = 3125000

ROI = Operating Income / Average Total Asset

= 600000 / 1500000*100 = 19.2 %

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