Question

Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $6,200,000; sales of $6,575,000; cost of goods sold of $3,625,000; and operating expenses of $1,307,000. Compute the division's return on investment:

rev: 12_09_2017_QC_CS-112007

Multiple Choice

• 24.99%.

• 19.9%

• 26.5%.

• 19.6%.

• 23.9%.

Answer 1

Answer : C = 26.50 %

>> Net Operating Income = $ 6,575,000 - $ 3,625,000 - $ 1,307,000 = $ 1,643,000.

>> Return on Investment = ( Net Operating Income * 100 ) / Average Total Assets

>> Return on Investment = ( $ 1,643,000 * 100 ) / 6,200,000

>> Return on Investment = 26.50 %