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Sales $ 110,000,000
Invested capital $ 55,000,000
Net income $ 3,300,000
E10-31 ( similar to ) p . 396
Lucy Company has assets of $ 2.2 million and long-term , 10 % debt of $ 1,200,000 . Ethel Company has assets of $ 2.2 million and no long-term debt . The annual operating income ( before interest ) of both companies is $ 550,000 . Ignore taxes .
Return on investment ( ROI ) is calculated as income divided by invested capital . To apply ROI , we must measure invested capital . However , there are many different interpretations of this concept . To understand what ROI figures really mean for a particular company , you