How do I find the ROI, profit margin, and turnover when the following is given:
$750,000- invested capital
$600,000-sales in one year
$96,000- profit in one year
![]() |
How do I find the ROI, profit margin, and turnover when the following is given:
$750,000- invested capital
$600,000-sales in one year
$96,000- profit in one year
ROI = (Gain of Investment - Cost of Investment) / Cost of Investment
Profit Margin = Net Income / Revenue
How do I find the ROI, profit margin, and turnover when the following is given:
$750,000- invested capital
$600,000-sales in one year
$96,000- profit in one year
From the info given, I suspect you're looking for the Dupont extended equation, which you should be able to find in your textbook:
ROI = profit margin x asset turnover
profit margin = net profit/sales
asset turnover = sales/assets (i.e. invested capital)
Invested Capital = Current Assets + Non-Current Assets = Total Assets = $750,000
Total Asset Turnover = Sales/ Total Assets = $600,000/$750,000 = 0.8
Net income = Net Profit = $96,000
Net Profit Margin = Net Profit / Sales = $96,000/$600,000 = 0.16
Return on Assets = Net Profit Margin * Total Asset Turnover = 0.16 * 0.8 = 0.128
So
Total Asset Turnover = 0.8
Net Profit Margin = 0.16
Return on Assets = 0.128
All times are GMT -7. The time now is 01:01 PM. |