Question

Synergy Inc. has reported the following operating information for one of its divisions: Sales revenue $150,000 Operating income $30,000 Operating assets $375,000 Calculate the division's margin, turnover, and ROI.

Answer 1

Answer:

Division's margin = 20%

Turnover = 40%

Return On Investment = 8%

Explanation:

Given:

Sales revenue = $150,000

Operating income = $30,000

Operating assets = $375,000

Find:

Division's margin

Turnover

Return On Investment

Computation:

Division's margin = [Operating income / Sales revenue]100

Division's margin = [30,000 / 150,000]100

Division's margin = 20%

Turnover = [Sales revenue / Operating assets]100

Turnover = [150,000 / 375,000]100

Turnover = 40%

Return On Investment = Division's margin x Turnover

Return On Investment = 20% x 40%

Return On Investment = 8%