Reed Company\'s sales last year totaled $310,000 and its return on investment (R

Question

Reed Company's sales last year totaled $310,000 and its return on investment (ROI) was 12%. If the company's turnover was 4, then its net operating income for the year must have been:

A. $9,300

B. $2,325

C. $37,200

D. it is impossible to determine from the data given

Reed Company's sales last year totaled $310,000 and its return on investment (ROI) was 12%. If the company's turnover was 4, then its net operating income for the year must have been:

A. $9,300

B. $2,325

C. $37,200

D. it is impossible to determine from the data given

Explanation / Answer

Answer:

Operating Assets = Sales / Turnover = 310,000 / 4 = $77,500

Operating Income = Operating Assets * ROI = 77,500 * 12% = $9,300.

So, the answer is A. $9,300

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