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Sales and Average Operating Assets for Company P and Company

Question 98

Multiple Choice

Sales and average operating assets for Company P and Company Q are given below:
 Sales Average  Operating Assets  Company P $20,000$8,000 Company Q $50,000$10,000\begin{array}{|l|r|r|}\hline & \text { Sales Average } & \text { Operating Assets } \\\hline \text { Company P } & \$ 20,000 & \$ 8,000 \\\hline \text { Company Q } & \$ 50,000 & \$ 10,000 \\\hline\end{array}
What is the margin that each company (Company P and Company Q,respectively) will have to earn in order to generate a return on investment of 20%?


A) 2.5% and 5%.
B) 8% and 4%.
C) 12% and 16%.
D) 50% and 100%.

Correct Answer:

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