Asked by Diana Gasparyan on Jul 25, 2024
Verified
Chavin Company had the following results during August: net operating income, $220,000; turnover, 5; and return on investment (ROI) 25%. Chavin Company's average operating assets were:
A) $880,000
B) $44,000
C) $55,000
D) $1,100,000
Net Operating Income
Refers to the profit realized from a business's operations after subtracting all operating expenses, excluding taxes and interest.
- Quantify and comprehend the implications of turnover in terms of company investments and functional operations.
- Use theoretical concepts to compute the mean operating assets using provided operational statistics.
Verified Answer
KP
kajal patelAug 01, 2024
Final Answer :
A
Explanation :
ROI is calculated as Net Operating Income / Average Operating Assets. Given an ROI of 25% and a net operating income of $220,000, we can rearrange the formula to solve for Average Operating Assets: $220,000 / 0.25 = $880,000.
Learning Objectives
- Quantify and comprehend the implications of turnover in terms of company investments and functional operations.
- Use theoretical concepts to compute the mean operating assets using provided operational statistics.
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