Question

Tibbs Inc. had the following data for the most recent year: Net income = $300; Net operating profit after taxes (NOPAT) = $220; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,300. What was its return on invested capital (ROIC)? Select the correct answer. a. 10.47% b. 10.17% c. 9.57% d. 9.27% e. 9.87%

Answer 1

Answer:

Option (c) is correct.

Explanation:

Given that,

Net income = $300

Net operating profit after taxes (NOPAT) = $220

Total assets = $2,500

Short-term investments = $200

Stockholders' equity = $1,800

Total debt = $700

Total operating capital = $2,300

Return on invested capital:

= (Net operating profit after tax (NOPAT) ÷ Total operating capital) × 100

= ($220 ÷ $2,300 ) × 100

= 0.09565 × 100

= 9.565% or 9.57%