Arkansas Company Arkansas Co.has established a target rate of return of 16% for all divisions.For the most recent year,Little Rock Division generated sales of $10,000,000 and expenses of $7,500,000.Total assets at the beginning of the year were $5,000,000 and total assets at the end of the year were $7,000,000.
Refer to Arkansas Company.For the most recent year,what was Little Rock Division's return on investment?

Question

Quizplus · Accepted Answer

ROI = (Net Income / Total Assets) * 100
Net Income = Sales - Expenses = $10,000,000 - $7,500,000 = $2,500,000
Total Assets = (Beginning Total Assets + Ending Total Assets) / 2 = ($5,000,000 + $7,000,000) / 2 = $6,000,000
ROI = ($2,500,000 / $6,000,000) * 100 = 41.67%