Question
A company has a profit margin of 20% and asset turnover
of 4 times. What is the company‘s return on investment?Solution
Return on investment (RoI) can be estimated here from = Net profit/total assets Net profit margin = net profit/total sales and Asset turnover = total sales /total assets As such, RoI = Net profit * Asset turnover = 20% *4 Â = 80%
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