For the current year,Winston Inc.reported sales of $800 000 and an asset turnover of 2.The rate of return on average invested assets was 20 per cent.The company's margin for the year was:
A) 10 per cent
B) 40 per cent
C) 25 per cent
D) 50 per cent

Question

Quizplus · Accepted Answer

The margin is calculated as the rate of return on sales. Given the asset turnover of 2, the average invested assets are $400,000 ($800,000 / 2). With a 20% return on these assets, the net income is $80,000 ($400,000 * 20%). The margin is then $80,000 / $800,000 = 10%.

For the Current Year,Winston Inc