Question

Planet Company had operating income of $12,000, average operating assets of $125,000, and sales of $45,000. What is Planet's return on investment (ROI)? (Note: Round answer to two decimal places.)

Answer 1

Return on investment can be given by 

$\frac{Profit}{Cost\ of\ goods\ sold} \times100\%$

Given that the profit is $12,000 and sales is $45,000. Thus, the cost of goods sold is given by $45,000 - $12,000 = $33,000.

Therefore, the return on investment is

$\frac{12000}{33000} \times100\%=36.36\%$