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Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $ 7,500,000 Net operating income $ 600,000 Average operating assets $ 5,000,000 Required: 1. Compute the margin. 2. Compute the turnover. (Round your answer to 1 decimal place.) 3. Compute the return on investment (ROI). (Do n

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Answer:

1. 8%

2. 1.5

3. 12%

Explanation:

1) Computation for the margin

Using this formula

Margin = Net operating income/Sales

Let plug in the formula

Margin= 600000/7500000

Margin = 8%

2) Computation for the turnover

Using this formula

Turnover = Sales/average operating assets

Let plug in the formula

Turnover = 7500000/5000000

Turnover= 1.5

3) Computation for the return on investment (ROI

ROI = 8*1.5

ROI= 12%