When an organization allows divisional managers to be responsible for short-term loans and credit, the division's invested capital should be measured by
A) total assets minus total liabilities.
B) average total assets minus average current liabilities.
C) average total assets minus average total liabilities.
D) average total liabilities minus average current assets.
E) average total liabilities minus total assets.

Question

Quizplus · Accepted Answer

When divisional managers are responsible for short-term loans and credit, the division's invested capital is best measured by average total assets minus average current liabilities. This approach accounts for the assets managed by the division while excluding short-term liabilities, reflecting the division's responsibility for managing short-term financial resources.

When an Organization Allows Divisional Managers to Be Responsible for Short-Term