Huang Company reported the following information for the current year: $\begin{array}{|l|lr|}
\hline \text { Sales } & \$ & 400,000 \
\hline \text { Average Operating Assets } & \$ & 250,000 \
\hline \text { Margin } & & 10 \% \
\hline
\end{array}$ The company's return on investment was:
A) 10%.
B) 6.25%.
C) 16%.
D) Cannot be ascertained from the information provided.

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Margin multiplied by Asset Turnover. Margin is given as 10%, and Asset Turnover is Sales divided by Average Operating Assets, which is 400,000 / 250,000 = 1.6. Therefore, ROI = 10% * 1.6 = 16%.

Huang Company Reported the Following Information for the Current Year