Question

largo company recorded for the past year sales of $972,000 and average operating assets of $270,000. what is the margin that largo company needed to earn in order to achieve an roi of 53.8%? (hint: first solve for net operating income using roi and avg. operating assets. then, use sales and net operating income to determine margin.) largo company recorded for the past year sales of $972,000 and average operating assets of $270,000. what is the margin that largo company needed to earn in order to achieve an roi of 53.8%? (hint: first solve for net operating income using roi and avg. operating assets. then, use sales and net operating income to determine margin.) 14.94% 9.57% 11.45% 53.80%

Answer 1

To achieve an ROI of 53.8% with average operating assets of $270,000, Largo Company needs a margin of 14.94%, calculated by first finding the Net Operating Income from the desired ROI and then determining the margin using the NOI in relation to sales revenue.

Step-by-step explanation:

To calculate the margin Largo Company needed to earn to achieve a Return on Investment (ROI) of 53.8%, one must first determine the Net Operating Income (NOI). ROI is calculated by dividing the NOI by the average operating assets, then multiplying by 100 to get a percentage. With this formula, the NOI can be found as follows:

ROI (%) = (NOI / Average Operating Assets) x 100

53.8% = (NOI / $270,000) x 100

NOI = ($270,000 x 53.8%) / 100

NOI = $145,260

Next, we take the NOI and divide it by the sales revenue to find the margin:

Margin (%) = (NOI / Sales) x 100

Margin (%) = ($145,260 / $972,000) x 100

Margin (%) = 14.94%

Therefore, the margin Largo Company needed to earn to achieve an ROI of 53.8% is 14.94%.