Question

Joseph Company has an investment in assets of $1,311,000, operating income that is 10% of sales, and an ROI of 19%. From this information the amount of operating income would be:_________.
a. $249,090.
b. $349,090.
c. $264,090.
d. impossible to determine from the information given.

Answer 1

Answer:

$249,090

Explanation:

Calculation for the amount of operating income

Using this formula

ROI = Margin × Turnover

ROI = (Operating income ÷ Sales) × (Sales ÷

Operating assets)

Let plug in the formula

19% = 10% × (Sales ÷ $1,311,000)

19% ÷ 10% = Sales ÷ $1,311,000

1.9 = Sales ÷ $131,100

Sales =$131,100 × 1.9

Sales= $249,090

Therefore the amount of operating income would be:$249,090