Question

Vaughn Manufacturing had average operating assets of $5000000 and sales of $2500000 in 2016. If the controllable margin was $450000, the ROI was
50%
41%
9%
18%

Answer 1

Answer:

9%

Explanation:

The Return on Investment (ROI) is used to directly measure the amount of return, relative to the cost of the investment. It can be calculated by dividing the controllable margin by the company's average operating assets.

$ROI = \frac{\ 450000}{\ 5000000} \\ROI =0.09$

Therefore, the return on investment for Vaughn Manufacturing was 0.09 or 9%.