Grady Corporation Provides the Following Financial Information Calculate the Target Rate of Return

question 120

Multiple Choice

Grady Corporation provides the following financial information: $$\begin{array} { | l | r | } \hline \text { Minimum acceptable operating income } & \$ 520,000 \\\hline \text { Average total assets } & \$ 2,600,000 \\\hline \text { Operating income } & \$ 700,000 \\\hline \text { Return on investment } & 26.92 \% \\\hline \text { Net sales } & \$ 850,000 \\\hline\end{array}$$ Calculate the target rate of return.(Round your answer to two decimal places.)

• A) 20.00%
• B) 82.35%
• C) 26.92%
• D) 61.18%

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Definitions:

Average Investment

The mean amount invested in certain assets or projects over a specific time period, aiming to gauge investment activity.

Net Working Capital

The gap between what a business owns in short-term assets versus what it owes in short-term liabilities.

Net Fixed Assets

The value of a company’s property, plant, and equipment (PP&E) minus its accumulated depreciation, indicating the net book value of its fixed assets.

Total Assets

The sum of all assets owned by a company, including cash, inventories, property, and equipment.