Answer:
Division A is doing better and his more profitable because it has a higher ROI than Division B
Explanation:
<em>Return on Investment is the proportion of operating assets that an investment center earned as as net operating income</em>.
ROI is measure of the returned earned by a division relative to the amount invested in the assets used to generate the return.
It is calculated as follows
ROI = operating income/operating assets
<em>Division A</em>
Net operating income = Sales - expenses
Net operating income = 200,000 - 150,000 = 50,000
Operating assets = 950,000
ROI = 50,000/950,000× 100 = 5.26
%
<em>Division B</em>
Net operating income = 45,000 - 35,000 = 10,000
Operating assets = 200,000
ROI = 10,000/ 200,000 × 100 = 5
%
Division A is doing better and his more profitable because it has a higher ROI than Division B
