If Dixie Company has sales of £1,200,000 and operating assets of £600,000, what operating margin will they have to earn to generate an ROI of 20 per cent?
A)5%
B)7.5%
C)10%
D)20%

Question

Quizplus · Accepted Answer

ROI = Operating Income/Operating Assets
20% = Operating Income/£600,000
Operating Income = £120,000

Operating Margin = Operating Income/Sales
Operating Margin = £120,000/£1,200,000
Operating Margin = 10%

If Dixie Company Has Sales of £1,200,000 and Operating Assets