Question

Cabal Products is a division of a major corporation. Last year the division had total sales of $8,790,000, net operating income of $428,400, and average operating assets of $3,000,000. The company's minimum required rate of return is 14%. The division's margin is closest to: 4.9% 44.7% 14.3% 38.9%

Answer 1

Division's Margin

Division's Margin = [Net operating income / Total sales] x 100

= [$428,400 / $8,790,000] x 100

= 4.9%

“Hence, the Division's Margin is closest to 4.9%”