If return on investment is 12.5% and investment turnover is 1.2 times,profit margin is:
A) 15%
B) 13.7%
C) 10.42%
D) 9.6%

Question

Quizplus · Accepted Answer

The formula for return on investment (ROI) is ROI = profit margin x investment turnover.
We know ROI= 12.5% and investment turnover= 1.2 times, then we can find the profit margin by rearranging the formula.
Profit margin = ROI / Investment turnover
Profit margin = 12.5% / 1.2
Profit margin = 10.42%
Therefore, the correct answer is C - 10.42%.

If Return on Investment Is 12