Question

Given the following data:

Average operating assets $ 720, 000
Total liabilities $ 51, 840
Sales $ 432,000
Contribution margin $ 250,560
Net operating income $ 108, 000

Return on investment (ROI) is:

Answer 1

To calculate Return on Investment (ROI), divide the Net operating income by the Average operating assets and multiply by 100. Based on the provided figures, the ROI is calculated as ($108,000 / $720,000) × 100, resulting in a 15% ROI.

Step-by-step explanation:

The question asks to calculate the Return on Investment (ROI) using the provided data. To calculate ROI, you divide the Net operating income by the Average operating assets and then multiply by 100 to get a percentage. In this case, you would take the provided net operating income of $108,000 and divide it by the average operating assets of $720,000.

ROI = (Net Operating Income / Average Operating Assets) × 100

ROI = ($108,000 / $720,000) × 100

ROI = 15%

Therefore, the ROI for the data provided is 15%.

To calculate Return on Investment (ROI), we need to use the formula ROI = Net Operating Income / Average Operating Assets. Given that the Net Operating Income is $108,000 and the Average Operating Assets is $720,000, we can substitute these values into the formula: ROI = $108,000 / $720,000. Simplifying this expression, we find that ROI is approximately 0.15, or 15%.