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If a company reports profit margin of 33.1% and investment turnover of 1.20 for one of its investment centers, the return on investment must be:

Question

If a company reports profit margin of 33.1% and investment turnover of 1.20 for one of its investment centers, the return on investment must be:

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Solution

The return on investment (ROI) can be calculated by multiplying the profit margin by the investment turnover.

Here's the step-by-step calculation:

  1. Convert the profit margin percentage to a decimal: 33.1% = 0.331
  2. Multiply the profit margin (in decimal form) by the investment turnover: 0.331 * 1.20 = 0.3972

So, the return on investment would be 39.72%.

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