Rose Company has a target rate of return of 10%,an ROI of 36%,and capital turnover of 3.0.The sales margin for Rose Company would be closest to:
A)3%.
B)12%.
C)30%.
D)108%.

Question

Quizplus · Accepted Answer

Sales Margin = ROI x Capital Turnover
Sales Margin = 36% x 3.0
Sales Margin = 108%
Since the target rate of return is only 10%, the sales margin will need to be lower than 108%. The closest option provided is 12%, which is choice B.

Rose Company Has a Target Rate of Return of 10%,an