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17 October, 14:29

Largo Company recorded for the past year sales of $414,400 and average operating assets of $259,000. What is the margin that Largo Company needed to earn in order to achieve an ROI of 28.8%?

A. 18.00%

B. 1.60%

C. 28.80%

D. 3.47%

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Answers (1)
  1. 17 October, 14:39
    0
    A. 18.00%

    Explanation:

    In this question, first we have to apply the return on investment formula so that the net income value could find out which is shown below:

    Return on investment = Net Income : Average Operating Assets * 100

    28.8% = Net Income : $259,000

    So, the Net income would be

    = $74,592

    Now the margin would be

    = Net income : Sales * 100

    = $74,592 : $414,400 * 100

    = 18%
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