If a company reports profit margin of 33.1% and investment turnover of 1.20 for one of its investment centers, the return on investment must be:
Question
If a company reports profit margin of 33.1% and investment turnover of 1.20 for one of its investment centers, the return on investment must be:
Solution
The return on investment (ROI) can be calculated by multiplying the profit margin by the investment turnover.
Here's the step-by-step calculation:
- Convert the profit margin percentage to a decimal: 33.1% = 0.331
- Multiply the profit margin (in decimal form) by the investment turnover: 0.331 * 1.20 = 0.3972
So, the return on investment would be 39.72%.
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