Dantone,Inc.provides the following information: $$\begin{array} { | l | l | }
\hline \text { Profit margin ratio } & 7 \% \
\hline \text { Asset turnover ratio } & 2 \text { times } \
\hline \text { Net sales } & \$ 500,000 \
\hline \text { Target rate of return } & 3 \% \
\hline
\end{array}$$ Calculate the return on investment.
A) 14%
B) 56%
C) 1%
D) 15%

Question

Dantone,Inc.provides the following information: $$\begin{array} { | l | l | } 
\hline \text { Profit margin ratio } & 7 \% \
\hline \text { Asset turnover ratio } & 2 \text { times } \
\hline \text { Net sales } & \$ 500,000 \
\hline \text { Target rate of return } & 3 \% \
\hline
\end{array}$$ Calculate the return on investment.
A) 14%
B) 56%
C) 1%
D) 15%

Quizplus · Accepted Answer

The return on investment (ROI) can be calculated by multiplying the profit margin ratio by the asset turnover ratio. Here, it's 7% (0.07) * 2 = 14%.

Dantone,Inc Calculate the Return on Investment