Question
Stan’s Balloon Rides had net sales of
Calculate the return on investment. (Round to the nearest tenth)
Select one:
a.
b.
c.
d.
Calculate the return on investment. (Round to the nearest tenth)
Select one:
a.
b.
c.
d.
Ask by Bond Little. in the United States
Mar 21,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
The return on investment is approximately 29.4%.
Solution
Given the following:
- Net sales:
- Cost of goods sold:
- Operating expenses:
- Owner’s equity:
Step 1. Calculate Net Income
First, subtract the cost of goods sold and operating expenses from net sales.
Compute the subtraction:
Step 2. Calculate Return on Investment (ROI)
The ROI is calculated by dividing the net income by the owner’s equity and then converting the result to a percentage.
Substitute the values:
Step 3. Compute the ROI
Perform the division:
Multiply by 100 to convert to a percentage:
Thus, the return on investment is approximately
The correct answer is:
a.
Answered by UpStudy AI and reviewed by a Professional Tutor
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Explain 
Simplify this solution The Deep Dive
To calculate the return on investment (ROI), we first need to determine the net income. Net income is calculated by subtracting the cost of goods sold (COGS) and operating expenses from net sales.
Net Sales =
Cost of Goods Sold =
Operating Expenses =
Cost of Goods Sold =
Operating Expenses =
Net Income = Net Sales - COGS - Operating Expenses
Net Income =
Net Income =
Now, we can calculate ROI using the formula:
ROI =
ROI =
Plugging in the values:
ROI =
ROI =
So, the correct answer is a. 29.4%.
Stan’s Balloon Rides is likely to attract adventure seekers, and analyzing its ROI can provide insights into how effectively it utilizes owner’s equity to generate profit. A high ROI like 29.4% indicates a strong performance in relation to the investment.
One big takeaway is the importance of keeping operating expenses in check; any unnecessary costs can eat into that beautiful profit margin! Always track those expenses carefully; they can fly away quickly just like hot air balloons.
