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|
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:
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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fromChapter 25 / Lesson 6