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:
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
To find the average operating assets, we can use the Return on Investment (ROI) formula. The formula for ROI is:
ROI = Net Operating Income / Average Operating Assets
We can rearrange this formula to solve for Average Operating Assets:
Average Operating Assets = Net Operating Income / ROI
Using the given values, the formula becomes:
Average Operating Assets = $360,000 / 0.24
Calculating this, we get:
Average Operating Assets = $1,500,000
Therefore, Chavin Company's average operating assets were $1,500,000.