The following information regarding Mahen, Inc. is available: Sales $1,000,000 C
ID: 2498450 • Letter: T
Question
The following information regarding Mahen, Inc. is available:
Sales $1,000,000
Cost of goods sold $400,000
Operating expenses $350,000
Operating income $250,000
Average invested capital $2,000,000
7. Required information
What is the return on investment for Mahen, Inc?
25.00%.
60.00%.
30.00%.
12.50%.
8. Required information
What is the return on sales for Mahen, Inc.?
30.00%.
25.00%.
60.00%.
12.50%.
9. Required information
What is the capital turnover for Mahen, Inc.?
12.50%.
50.00%.
25.00%.
60.00%.
Explanation / Answer
Mahen, Inc.
Data Available
Sales $1,000,000
Cost of goods sold $400,000
Operating expenses $350,000
Operating income $250,000
Average invested capital $2,000,000
7. Return on Investment
= Operating income / Average invested capital
= 250,000 / 2,000,000
= 12.50%
Answer = Option D 12.50%
8. Return on Sales
= Operating Income / Sales
= 250,000 / 2,000,000
= 25%
Answer = Option B 25%
9. Capital Turnover Ratio
= Sales / Capital Employed
= $1,000,000 / $2,000,000
= 0.5 Times (or) 50%
Answer = Option C 50%
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