Question

In: Finance

A firm has an ROI of 10%, turnover of 5X, and sales of $10,000,000. What is...

A firm has an ROI of 10%, turnover of 5X, and sales of $10,000,000. What is the firm’s operating margin % generated during the year?

Display your answer using the following format only:   12  (do not use a percentage sign or any decimal points in your answer)

Solutions

Expert Solution

Assets turnover = Net sales / total assets

5 = $10,000,000 / total assets

Total assets = $10,000,000 / 5

Total assets = $2,000,000

Net income = ROI * total assets

= 0.10 * $2,000,000

= $200,000

Operating margin% = Net income / sales

= $200,000 / $10,000,000 = 2 (0.02 * 100)

OPERATING MARGIN% = 2

jeff jeffy answered 2 years ago
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