Question

For its three investment centers, Vaughn Company accumulates the following data: I II III Sales $1,941,000 $4,018,000 $3,956,000 Controllable margin 884,340 2,065,180 4,850,800 Average operating assets 4,913,000 7,943,000 12,127,000 Compute the return on investment (ROI) for each center.

Answer 1

Answer:

• Compute the return on investment (ROI) for each center.

I - 18%

II - 26%

III - 40%

Explanation:

The ROI (Return on Investment), it's a financial ratio that measure the benefit that an investor will receive in relation to their investment cost.

Div. I

$884,340  Controllable margin  

$4,913,000 Average operating assets  

18%

Div. II

$2,065,180  Controllable margin  

$7,943,000 Average operating assets  

26%

Div. III

$4,850,800  Controllable margin  

$12,127,000 Average operating assets  

40%