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5 June, 16:30

Cash Company has income from operations of $48,000, invested assets of $300,000, and sales of $480,000. Use the DuPont formula to compute the return on investment. If required, round your answers to two decimal places.

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  1. 5 June, 18:48
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    10%; 1.6 times and 16%

    Explanation:

    The computations are shown below:

    As we know that

    Profit margin is

    = Income from operation : Sales * 100

    = $48,000 : $480,000

    = 10%

    Investment turnover is

    = Sales : Invested assets

    = $480,000 : $300,000

    = 1.6 times

    And,

    Return on investment is

    = Profit margin * investment turnover

    = 10% * 1.6 times

    = 16%

    Therefore, we applied the above formulas
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