US CMA Part 1 · Chapter 3 · Question 21 of 30
A division reports operating income of $360,000, sales of $3,000,000 and average invested capital of $2,400,000. What is its return on investment, and how does it split into margin and turnover?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ROI 15%: profit margin 12% x asset turnover 1.25
Explanation
ROI = $360,000 / $2,400,000 = 15%. Profit margin = $360,000 / $3,000,000 = 12%. Asset turnover = $3,000,000 / $2,400,000 = 1.25 times. Check: 12% x 1.25 = 15% (the DuPont relationship).
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