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Reed Company’s sales last year totaled $150,000 and its return on investment (ROI) was 12%. If the company’s turnover was 3, then its net income for the year must have been

$2,000

$6,000

$12,000

$18,000

Please show me the equation.

Verified Answer :

meerkat18

Given:
Sales Revenue  = 150,000
ROI = 12%
turnover = 3

ROI = Margin Turnover Margin
12% = Margin 3
12%/3 = Margin
4% = Margin

Margin = Net Operating Income / Sales
4% = Net Operating Income / 150,000
4% * 150,000 = Net Operating Income
6,000 = Net Operating Income

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