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Sir, I don’t know how to work out these questions can u plz help me?
Sales $4,250,000
Operating income 850,000
Total assets 5,000,000
Current liabilities 250,00034 What is the sales margin if the target return is 12% and the average cost of capital is 10%?
A 20% B 85% C 17% D 5%
35 What is the division capital turnover?
A 20% B 85% C 17% D 117%
36 What is the division’s ROI?
A 17% B 5.88% C 17.89% D 85%
1) Sales margin is operating profit / sales as a percent.
So 850,000/4250000 x 100%2) Capital turnover (or asset turnover) is sales / (total assets – current liabilities) = 4250000/4750000
3) ROI = operating profit / (total assets – current liabilities) as a percentage
= 850,000/4750000 x 100%
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