Asked by Tashae Thomas on May 06, 2024
Verified
Last year a company had sales of $600,000, a turnover of 3.6, and a return on investment of 18%.The company's net operating income for the year was:
A) $166,667
B) $108,000
C) $30,000
D) $15,000
Net Operating Income
Represents the profit a company generates from its operations, minus all operating expenses except interest and taxes.
Turnover
The rate at which a company's inventory or assets are replaced or sold within a specific period.
ROI
Return on Investment; a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of multiple investments.
- Calculate the net operating income using provided operational data.
- Master the understanding of turnover in the context of investment opportunities.
Verified Answer
NK
Naila KabirMay 11, 2024
Final Answer :
C
Explanation :
ROI = Margin × Turnover
18% = Margin × 3.6
Margin = 18% ÷ 3.6 = 5%
Margin = Net operating income ÷ Sales
5% = Net operating income ÷ $600,000
Net operating income = 5% × $600,000 = $30,000
18% = Margin × 3.6
Margin = 18% ÷ 3.6 = 5%
Margin = Net operating income ÷ Sales
5% = Net operating income ÷ $600,000
Net operating income = 5% × $600,000 = $30,000
Learning Objectives
- Calculate the net operating income using provided operational data.
- Master the understanding of turnover in the context of investment opportunities.