EXERCISE 12-9 (CONTINUED)

3. Margin = Net operating income

Sales

$70,000 + $14,000

= $1,400,000

$84,000

= = 6%

$1,400,000

Turnover =

Average operating assets

= = 4

$350,000

ROI = Margin × Turnover

= 6% × 4 = 24%