### Understanding Return on Investment (ROI)This section provides data for a division of a major corporation and helps calculate the Return on Investment (ROI) for the most recent year. The data presented includes:- **Sales**: $17,950,000- **Net Operating Income**: $1,085,200- **Average Operating Assets**: $4,890,000**Question:**Calculate the division's ROI based on the given data.**Multiple Choice:**1. 5.60%2. 20.56%3. 16.71%4. 2.60%**Explanation:**To calculate ROI, use the formula:\[ \text{ROI} = \left( \frac{\text{Net Operating Income}}{\text{Average Operating Assets}} \right) \times 100 \]The data provided suggests working through this calculation to select the correct percentage from the options above.

Formula: Division return on investment = ( Net operating income / Average operating Assets ) x 100

Answered: Sales Net operating income Average…

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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Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): Sales $1,980,000 Cost of goods sold (891,000) Gross profit $1,089,000 Administrative expenses (594,000) Operating income $495,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $3,300,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin fill in the blank 1 % Investment turnover fill in the blank 2 Return on investment fill in the blank 3 % b. If expenses could be reduced by $99,000 without decreasing sales, what would be the impact on…
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Sales Net operating income Average operating assets $17,958,000 51,005,200 5 4,898,000 The division's return on investment (RO) is closest to