A division has profit of $45 000, sales of $550 000 and an investment base of $250 000 If the required charge for capital is 18 per cent, determine a The profit margin b The asset turnover c The return on investment d The relationship between the three measures in parts (a) to (c) e The residual in...

ROI ProfitInvestment 45000250000 18 ROS ...

A division has profit of $45 000, sales of $550 000 and an investment base of $250

Question:

A division has profit of $45 000, sales of $550 000 and an investment base of $250 000. If the required charge for capital is 18 per cent, determine:
a. The profit margin
b. The The return on investment
d. The relationship between the three measures in parts (a) to (c)
e. The residual income. Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.