Asked by Margaret Everett on Jul 19, 2024
Verified
Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000. What is the margin that Largo Company needed to earn in order to achieve an return on investment (ROI) of 15%?
A) 2.00%
B) 15.00%
C) 9.99%
D) 7.50%
Operating Assets
Assets that are used for the day-to-day operations of a business, contributing to its ability to generate revenue.
Return On Investment
A measure of the financial gain or loss on an investment relative to the amount of money invested, usually expressed as a percentage.
- Master the understanding of margin in the realm of investment prospects and business operational strategies.
- Comprehend and apply the return on investment (ROI) formula to evaluate company performance.
Verified Answer
LF
Lihini FernandoJul 25, 2024
Final Answer :
D
Explanation :
To achieve an ROI of 15%, Largo Company needs to earn $56,250 (15% of $375,000). The margin is calculated as the required earnings divided by sales, which is $56,250 / $750,000 = 7.50%.
Learning Objectives
- Master the understanding of margin in the realm of investment prospects and business operational strategies.
- Comprehend and apply the return on investment (ROI) formula to evaluate company performance.