Question

Auagaa474 Corporation had sales of $491,300 and average operating assets of $289,000 for the past period. What is the margin that Auagaa474 needed to earn in order to achieve an ROI of 27.2%?

Answer 1

Answer: 16%

Explanation:

Margin = Net operating income/ Sales

Net operating income is used in the ROI formula;

ROI = Net operating income/ Average operating assets

27.2% = Net operating income / 289,000

Net operating income = 289,000 * 27.2%

= $78,608

Margin = 78,608/491,300

= 16%