Cabell Products is a division of a major corporation. Last year the division had total sales of $25,540,000, net operating income of $1,277,000, and average operating assets of $7,151,200. The company's minimum required rate of return is 16%.The division's return on investment (ROI) is closest to:
A) 5.0%
B) 17.9%
C) 31.3%
D) 28.0%

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Net Operating Income divided by Average Operating Assets. So, ROI = $1,277,000 / $7,151,200 = 0.1786 or 17.9%.

Cabell Products Is a Division of a Major Corporation