Question

Cable company had the following results for the year just ended: operating income $2,500 turnover 4 return on investment 20% what were cable company's average operating assets during the year?

a. $10,000
b. $12,500
c. $50,000
d. $200,000

Answer 1

Using the Return on Investment (ROI) formula and given the Operating Income and ROI, we calculated that the average operating assets of Cable Company were $12,500 for the year.

Step-by-step explanation:

The question asks us to determine the average operating assets for Cable Company, given its operating income, turnover, and return on investment (ROI). To find the average operating assets, we can use the formula for ROI, which is:

ROI = (Operating Income / Average Operating Assets) x 100%

To find the average operating assets, we can rearrange the formula to solve for Average Operating Assets:

Average Operating Assets = Operating Income / (ROI / 100%)

Given that the Operating Income is $2,500 and the ROI is 20%, we can substitute in these values:

Average Operating Assets = $2,500 / (20% / 100%) = $2,500 / 0.2

Average Operating Assets = $12,500

Therefore, the average operating assets of Cable Company during the year were $12,500.