The Reed Division reports the following operating data for t

The Reed Division reports the following operating data for the past two years: Year 1 Year 2 16% 2.5 Margin Turnover Average operating assets Net operating Income Stockholders equity Sales 2.0 $150,000 $40,000 $80,000 $125,000 The return on Investment at Reed was exactly the same In Year 1 and Year 2 The margin In Year 2 was: (Round your Intermediate calculation and final answer to 2 decimal places.) ? 10.00% o 20.00% o 32.00% ? 48.00%

Solution

SOLUTION

Question -1

Margin in year 2 was 20%

ROI for year 1 = Margin * Turnover

= 16% * 2.5

= 40%

ROI for year 2 = ROI for year 1

= 40%

Margin= ROI / Turnover

=  40% / 2

= 20%