A company had the following results last year: sales, $700,000; return on investment, 28%; and margin, 8%. The average operating assets last year were:
Selected: a. $200,000 This answer is correct.
b. $2,450,000
c. $540,000
d. $2,500,000
Correct! Margin is Net operating income divided by sales. 8% is net operating income divided by $700,000 so net operating income totals $56,000. ROI is Net operating income divided by average operating assets so 28 percent is $56,000 divided by average operating assets which makes average operating assets $200,000.