Question

The following data pertain to Dakota Division’s most recent year of operations. Income $ 4,950,000 Sales revenue 57,500,000 Average invested capital 10,000,000
Required: Compute Dakota Division's sales margin, capital turnover, and return on investment for the year. (Round your answers to 2 decimal places (i.e.,1234 should be entered as 12.34).)

Answer 1

Answer:

Dakota Division's sales margin, capital turnover, and return on investment for the year is 8.61% , 575% and 49.5% respectively

Explanation:

The computations are shown below:

Sales margin:

= Operating Income ÷ Sales revenue × 100

= $4,950,000 ÷ $57,500,000 × 100

= 8.61%

Capital Turnover:

= Sales revenue ÷ Average invested capital × 100

= $57,500,000 ÷ $10,000,000  × 100

= 575% or 5 times

Return on investment:

= Operating Income ÷ Average invested capital  × 100

= $4,950,000 ÷ $10,000,000 × 100

= 49.5%