Question

Return on investment

The operating income and the amount of invested assets in each division of Conley Industries are as follows:

	Operating Income		Invested Assets
Retail Division	$140,800		$640,000
Commercial Division	79,800		420,000
Internet Division	73,100		430,000

a. Compute the return on investment for each division. (Round to the nearest whole percentage.)

Division	Percent
Retail Division	%
Commercial Division	%
Internet Division	%

Answer 1

Solution:
	Return on Investment (Retail Divission) =             (	Operating Income	/	Investment	)   x	100
	Return on Investment (Retail Divission) =             (	$                      1,40,800	/	$          6,40,000	)   x	100
	Return on Investment (Retail Divission) =	0.22	x	100
	Return on Investment (Retail Divission) =	22%
	Return on Investment (Commercial Divission) = (	Operating Income	/	Investment	)   x	100
	Return on Investment (Commercial Divission) = (	$                          79,800	/	$          4,20,000	)   x	100
	Return on Investment (Commercial Divission) = (	0.19	x	100
	Return on Investment (Commercial Divission) = (	19%
	Return on Investment (Internet Divission) = (	Operating Income	/	Investment	)   x	100
	Return on Investment (Internet Divission) = (	$                          73,100	/	$          4,30,000	)   x	100
	Return on Investment (Internet Divission) = (	0.17	x	100
	Return on Investment (Internet Divission) = (	17%
	Answer =
	Retail Divission	22%
	Commercial Divission	19%
	Internet Divission	17%