Question

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,540,000, net operating income of $1,277,000, and average operating assets of $7,151,200. The company's minimum required rate of return is 16%. The division's return on investment (ROI) is closest to:

Answer 1

Answer:

The divisions return on investment would be close to 17.86%

Explanation:

Return on investment is a very useful financial ratio which is used to take out how much of the benefit or profit , an investor would get in relation to the investment made by them.

FORMULA FOR CALCULATING RETURN ON INVESTMENT =

\frac{NET \: OPERATING \: INCOME}{TOTAL \: OPERATING \: ASSETS}

given - operating income = $1277,000

           total operating assets = $7151,200

= \frac{\$ 1,277,000}{\$ 7,151,200} \times 100

= 17.857%

= 17.86% ( APPROXIMATELY )