Retail Sales and Wholesale Sales are the only divisions of Terra Company. The following information was gathered for the two divisions for the current year: $\begin{array}{lcccc}
&\text { Retail Division }&\text { Wholesale Divisiot }\
\text { Operating income } & \$ 7,500,000 & \$ 4,000,000 \
\text { Operating assets } & \$ 37,500,000 & \$ 17,500,000
\end{array}$ The company has $2,500,000 in operating assets that are not assigned to either of the divisions and $350,000 in corporate expenses that are not reflected in the information above. Based on this information, what is the ROI for the company as a whole?
A) 20.91%
B) 42.86%
C) 19.39%
D) The answer cannot be determined using the information provided.

Question

Retail Sales and Wholesale Sales are the only divisions of Terra Company. The following information was gathered for the two divisions for the current year: $\begin{array}{lcccc}
&\text { Retail Division }&\text { Wholesale Divisiot }\
\text { Operating income } & \$ 7,500,000 & \$  4,000,000 \
\text { Operating assets } & \$ 37,500,000 & \$  17,500,000
\end{array}$  The company has $2,500,000 in operating assets that are not assigned to either of the divisions and $350,000 in corporate expenses that are not reflected in the information above. Based on this information, what is the ROI for the company as a whole?
A) 20.91%
B) 42.86%
C) 19.39%
D) The answer cannot be determined using the information provided.

Quizplus · Accepted Answer

The total operating income is $7,500,000 + $4,000,000 = $11,500,000. The total operating assets are $37,500,000 + $17,500,000 + $2,500,000 = $57,500,000. ROI = Total Operating Income / Total Operating Assets = $11,500,000 / $57,500,000 = 0.1991 or 19.91%.

Retail Sales and Wholesale Sales Are the Only Divisions of Terra