Chapter 24, Problem 24.10EX

### Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Chapter
Section

### 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