Question

Sales $ 100,000 Operating expenses $ 94,000 Operating assets $ 40,000 Stockholder's equity $ 25,000 Cost of capital 10 % What is Sweet Dreams Company's return on investment (ROI)

Answer 1

Answer:

15%

Explanation:

Given that :

Operating expenses = $94000

Operating assets = $40,000

Sales = $100,000

Return on investment = profit / operating asset

Profit = sales - operating expenses

Profit = (100,000 - 94000) = $6000

Return on investment = $6000 / $40000 = 0.15

= 0.15 * 100% = 15%