Question

chavin company had the following results during august: net operating income, $360,000; turnover, 3; and roi 24%. chavin company's average operating assets were:

Answer 1

To calculate the average operating assets, we need to divide the net operating income by the ROI.

ROI = Net Operating Income / Average Operating Assets

Rearranging the formula, we can calculate the average operating assets:

Average Operating Assets = Net Operating Income / ROI

Average Operating Assets = $360,000 / 0.24

Average Operating Assets = $1,500,000