The following information is available for Arnett Company:
$\begin{array}{lclr}
\text { Current assets } & \$ 100,000 & \text { Current liabilities } & \$ 175,000 \
\text { Property, plant and } & & \text { Long-term liabilities } & 100,000 \
\text { equipment } & 150,000 & \text { Stockholders' equity } & 25,000\
\text { Other assets }&50,000&\text { Total liabilities and }\
\text { Total assets }&\$300,000&\text { stockholders' equity }&\$300,000
\end{array}$
Invested capital is defined as total assets.Net operating income is $60,000.What is ROI?
A) 20%
B) 30%
C) 50%
D) 120%

Question

Quizplus · Accepted Answer

ROI (Return on Investment) is calculated as Net Operating Income divided by Invested Capital. Here, Net Operating Income is $60,000 and Invested Capital (defined as total assets) is $300,000. Thus, ROI = ($60,000 / $300,000) * 100% = 20%.

The Following Information Is Available for Arnett Company Invested Capital Is Defined as Total Assets