Central Division for Chemical Company has a rate of return on investment of 22% and an investment turnover of 1.4.What is the profit margin?
A) 20%
B) 15.7%
C) 14%
D) 6.36%

Question

Quizplus · Accepted Answer

Profit margin can be calculated by multiplying the rate of return on investment with investment turnover. Therefore, Profit margin = 22% x 1.4 = 30.8%. However, the answer choices do not include 30.8%, so we need to round off the answer to the nearest option. Therefore, the closest answer is B) 15.7%, as it is the only option that is closest to 30.8% when rounded off.

Central Division for Chemical Company Has a Rate of Return