BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Return on investment

 The income from operations and the amount of invested assets in each division of Beck Industries are as follows:

  Income from Operations Invested Assets
Retail Division $5,400,000 $30,000,000
Commercial Division 6,250,000 25,000,000
Internet Division 1,800,000 12,000,000

 a. Compute the return on investment for each division.

 b. Which division is the most profitable per dollar invested?

(a)

To determine

Return on investment (ROI): This financial ratio evaluates how efficiently the assets are used in earning income from operations. So, ROI is a tool used to measure and compare the performance of a units or divisions or a companies.

Formula of ROI:

Return on investment=Income from operationsInvested assets

To determine: The ROI for each division

Explanation

Determine ROI of R Division, if income from operations is $5,400,000, and invested assets are $30,000,000.

Return on investment=Income from operationsInvested assets=$5,400,000$30,000,000= 0.18 or 18%

Determine ROI of C Division, if income from operations is $6,250,000, and invested assets are $25,000,000

(b)

To determine
The profitable division

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is COSO?

Accounting Information Systems

Compare the four forms of competition.

Foundations of Business (MindTap Course List)

COST OF COMMON EQUITY The future- earnings, dividends, and common stock price of Carpetto Technologies Inc. are...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Distinguish buy-side and sell-side systems.

Pkg Acc Infor Systems MS VISIO CD