White Hills Ltd Reported a Return on Investment of 12

question 68

Multiple Choice

White Hills Ltd reported a return on investment of 12 per cent, a capital turnover of 5 and income of $180 000. What was the company's invested capital?

• A) $300 000
• B) $900 000
• C) $1 500 000
• D) $7 500 000

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, respectively.

Discounted Payback Period

The time required to recover an investment's costs, taking the time value of money into account by discounting future cash flows.

Operating Cash Flow

Cash generated from a company's normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.

Accounting Break-even

The point at which total costs and total revenues are equal, meaning the business is not making a profit or loss.