Question

Randall Company makes and distributes outdoor play equipment. Last year sales were $4,800,000, operating income was $1,200,000, and the assets used were $6,000,000.
Return on sales, the efficiency component of return on investment (ROI), is_______________.

Answer 1

Answer:

25%

Explanation:

The formula and the computation of the return on sales is shown below:

Return on sales = (Operating income) ÷ (Last year sales) × 100

where,

Operating income = $1,200,000

And, the last year sales = $4,800,000

So, the return on sales is

= ($1,200,000) ÷ ($4,800,000) × 100

= 25%

By dividing the operating income by the last year sales we can get the return on sales