Question

Cabell Products is a division of a major corporation. Last year the division had total sales of $28,540,000, net operating income of $2,597,140, and average operating assets of $5,708,000. The company's minimum required rate of return is 10%. The division's return on investment (ROI) is closest to:

Multiple Choice

9.1%

45.5%

91.0%

20.0%

Answer 1

Return on Investment (ROI)	45.5%
Workings:
Sales	$ 2,85,40,000
Net Operating income	$     25,97,140
Average Operating assets	$     57,08,000
Margin	10%
Return on Investment (ROI)	=	Net Operating income / Average Operating assets
	=	$2597140 / $5708000
	=	45.50%