Prescott Enterprises has a target rate of return of 12%,an ROI of 30%,and capital turnover of 2.0.The sales margin for Prescott Enterprises would be closest to:
A)6%.
B)15%.
C)24%.
D)60%.

Question

Quizplus · Accepted Answer

Sales Margin = ROI * Capital Turnover 
Sales Margin = 30% * 2 
Sales Margin = 60%

However, the target rate of return is only 12%, so the actual sales margin for Prescott Enterprises would likely be lower than 60%. The closest option is 15%, which is the correct answer.

Prescott Enterprises Has a Target Rate of Return of 12%,an