Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Manage

Question

3 years ago

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Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Manage

ment's target rate of return is 30% and the weighted average cost of capital is 15%. Its effective tax rate is 40%. Sales $6,000,000 Operating income 1,800,000 Total assets 1,000,000 Current liabilities 810,000 What is the division's Return on Investment (ROI)?

Business

1 answer:

Artist 52 [7] · Answer 1 · 2022-01-12T21:35:03+03:00

Answer:

The division's Return on Investment (ROI) is 180%

Explanation:

The computation of the return on investment is shown below:

= (Operating income) ÷ (total assets) × 100

= ($1,800,000) ÷ ($1,000,000) × 100

= 180%

The return on investment shows a relationship between the operating income and the total assets / investment.

The other information which is given in the question is not consider in the computation part. Hence, ignored it

Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year​ (in thousands).​ Manage

Assume the Hiking Shoes division of the All About Shoes Corporation had the following results last year (in thousands). Manage