Question

If a company reports profit margin of 32.3% and investment turnover of 1.30 for one of its investment centers, the return on investment must be:

Answer 1

Answer:

42%

Explanation:

Calculation to determine what the return on investment must be:

Using this formula

Return on investment=Profit margin*Investment turnover

Let plug in the formula

Return on investment=32.3%*1.30

Return on investment=0.4199*100

Return on investment=41.9%

Return on investment=42% (Approximately)

Therefore the return on investment must be:42%