Answer:
1. Margin = 0.32 or 32%
2. Turnover = $19,000,000 or Operating Asset Turnover = 0.52 or 52%
3. Return on Investment = 0.17 or 17%
Explanation:
Firstly, list out the parameters we were given:
Sales = $19,000,000, Net Operating Income = $6,100,000,
Average Operating Assets = $36,500,000
1. Operating Margin = Net Operating Income / Sales
Operating Margin = 6,100,000 ÷ 19,000,000 = 0.32
Operating Margin = <u>0.32</u> (to 2 decimal places)
Operating Margin = <u>32%</u>
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2. Turnover refers to sales or revenue made during a particular period. In which case turnover is <u>$19,000,000</u>
However, if the turnover referred to is the Operating Asset Turnover, that is calculated below:
Operating Asset Turnover = Sales / Average Operating Assets
Operating Asset Turnover = 19,000,000 ÷ 36,500,000
Operating Asset Turnover = <u>0.52</u> (to 2 decimal places)
Operating Asset Turnover = <u>52%</u>
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3. Return on Investment (ROI) = Net Operating Income / Average Operating Assets
Return on Investment (ROI) = 6,100,000 ÷ 36,500,000
Return on Investment (ROI) = <u>0.17</u> (to 2 decimal places)
Return on Investment (ROI) = <u>17%</u>
