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Last year a company had sales of $410,000, a turnover of 2.8, and a return on investment of 33.6%. The company's net operating income for the year was:

1 Answer

6 votes

Answer:

$49,200

Step-by-step explanation:

The turnover hinted in the question means asset turnover, which can be used to determine the worth of assets invested in the year as follows:

asset turnover=net sales/total assets

assets turnover=2.8

net sales=$410,000

total assets employed in the year is the unknown

2.8=$410,000/total assets

2.8*total assets=$410,000

total assets=$410,000/2.8= $146,429

return on investment=net operating income/total assets

return on investment=33.6%

net operating income is unknown

total assets=$146,429

33.6%=net operating income/$146,429

net operating income=33.6%*$146,429 =$49,200

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