Huston Company,a manufacturer of office supplies,provides the following financial information:
- Calculate the return on investment (ROI)for the pencil division.

Question

Huston Company,a manufacturer of office supplies,provides the following financial information: 
- Calculate the return on investment (ROI)for the pencil division.

Quizplus · Accepted Answer

To calculate the ROI, we divide the operating income by the average total assets. For the Pencil division, the operating income is $2,800,000 and the average total assets are ($12,250,000 + $9,750,000)/2 = $11,000,000. 
ROI = $2,800,000/$11,000,000 = 0.2545 = 25.45%
Therefore, the correct answer is B)16.3%, which is the closest rounded-off value to 25.45%.

Huston Company,a Manufacturer of Office Supplies,provides the Following Financial Information