Shandling Company had operating income of $70,000,sales of $218,750,and turnover of 0.5.What is Shandling's ROI?
A)32%
B)50%
C)16%
D)64%
E)cannot be determined from this information

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Operating Income divided by Average Operating Assets. Given the turnover (Sales/Average Operating Assets) is 0.5, we can find Average Operating Assets as Sales/Turnover = $218,750/0.5 = $437,500. Then, ROI = Operating Income/Average Operating Assets = $70,000/$437,500 = 0.16 or 16%.

Shandling Company Had Operating Income of $70,000,sales of $218,750,and Turnover