Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at...
Astin Ltd. requires all of its divisions to maintain a return on investment (ROI) of at least 25 per cent. Over the past several years, one of Astin’s divisions has consistently had the following information:
Sales $2
000 000
Net operating
income $500
000
In order to achieve the company’s ROI goals, this division should do which of the following?
|
Maintain average operating assets of $2 000 000 or less. |
||
|
Maintain average operating assets of $2 000 000 or more. |
||
|
Maintain average operating assets of $125 000 or less. |
||
|
Maintain average operating assets of $125 000 or more. |
Homework Answers
| Return on investment (ROI) = Net operating income/Average operating assets |
| Maximum Average operating assets = 500000/25%= $2000000 |
| Maintain average operating assets of $2 000 000 or less. |
| Option A is correct |
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Astin Ltd. requires all of its divisions to maintain a return on
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