Question

The following data pertain to Dakota Division's most recent year of operations.

Income $4,250,000
Sales revenue 57,500,000
Average invested capital 12,500,000
Required:

Compute Dakota Division's sales margin, capital turnover, and return on investment for the year.

Answer 1

The Dakota Division's sales margin, capital turnover, and return on investment for the year is 7.40% , 4.60 times and 34% respectively

Step-by-step explanation:

The computations are shown below:

1. For sales margin :

Margin = Income ÷ Sales × 100

= $4,250,000 ÷ $57,500,000 × 100

= 7.40%

2. For turnover:

Turnover = Sales ÷ Average invested capital

= $57,500,000 ÷ $12,500,000

= 4.60 times

3. For Return on investment:

Return on investment = Income ÷ Average invested capital × 100

= $4,250,000 ÷ $12,500,000 × 100

= 34%