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Net Sales Revenue Average Total Assets Operating Income ROI 24.1% Snow Sports Non-snow Sports $ 5,500,000 8,500,000 $ 990,000 1,530,000 $ 4,100,000 6,100,000 25.1%

Net Sales Revenue Average Total Assets Operating Income ROI 24.1% Snow Sports Non-snow Sports $ 5,500,000 8,500,000 $ 990,000 1,530,000 $ 4,100,000 6,100,000 25.1%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Using ROI and RI to evaluate investment centers

XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and inline skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-snow Sports. The following divisional information is available for the past year:

XTreme’s management has specified a 13% target rate of return. Calculate each division’s profit margin ratio. Interpret your results.

Net Sales Revenue Average Total Assets Operating Income ROI 24.1% Snow Sports Non-snow Sports $ 5,500,000 8,500,000 $ 990,000 1,530,000 $ 4,100,000 6,100,000 25.1%
Transcribed Image Text:Net Sales Revenue Average Total Assets Operating Income ROI 24.1% Snow Sports Non-snow Sports $ 5,500,000 8,500,000 $ 990,000 1,530,000 $ 4,100,000 6,100,000 25.1%
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