Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l }
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the division believes its revenues and operating expenses will continue to be $400,000 and $360,000, respectively. To what level would the Furniture Division have to reduce its operating assets to achieve the target ROI?

Question

Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the division believes its revenues and operating expenses will continue to be $400,000 and $360,000, respectively. To what level would the Furniture Division have to reduce its operating assets to achieve the target ROI?

Quizplus · Accepted Answer

The Answer of Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the division believes its revenues and operating expenses will continue to be $400,000 and $360,000, respectively. To what level would the Furniture Division have to reduce its operating assets to achieve the target ROI?

Use the Following Information to Answer Question Waverly Company Has Set a Target Return on Investment (ROI)