Last year,a company had shareholders' equity of $160,000,operating income of $16,000,and sales of $100,000.The turnover was 0.5.What was the return on investment (ROI)?
A) 7%.
B) 8%.
C) 9%.
D) 10%.

Question

Quizplus · Accepted Answer

The Return on Investment (ROI) is calculated as (Operating Income / Shareholders' Equity) * 100. Here, ROI = ($16,000 / $160,000) * 100 = 10%. However, the turnover ratio is given as 0.5, which means the assets are twice the equity. Therefore, ROI = 8%.

Last Year,a Company Had Shareholders' Equity of $160,000,operating Income of $16,000,and