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One item is omitted from each of the following computations of the rate of return on investment....

Question:

One item is omitted from each of the following computations of the rate of return on investment. Determine the missing items, identifying each by the appropriate letter.

Rate of Return on Investment = Profit Margin x Investment Turnover
12% = 5% x (a)
(b) = 8% x 2.00
14% = (c) x 1.40
13.5% = 6% x (d)
(e) = 15% x 1.20

Return on Investment

Return on Investment is expressed as a percentage. This measures how much of the amount you invested will be returned to you. This is one of the financial ratios to measure the profitability of a company. To compute for ROI, simply multiply profit margin by investment turnover.

Answer and Explanation:

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The simplest way to supply the missing data is to use this formula:

Return on Investment = Profit Margin * Investment Turnover

a. 0.12 / 0.05 = 2.4...

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