If the asset turnover and profit margin of a company are 1.85 and 0.35 respectively, the return on investment is.
Correct answer: A. 0.65
- A. 0.65
- B. 0.35
- C. 1.50
- D. 5.29
Explanation
Return on investment is calculated as asset turnover multiplied by profit margin: 1.85 × 0.35 = 0.6475, or approximately 0.65. The other figures either use only one input or apply the wrong operation.
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Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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