Terra Company has two divisions,the Retail Division and the Wholesale Division.The following information was gathered for the two divisions for the current year: $$\begin{array} { l l c }
& \text { Retail Division } & \text { Wholesale Division } \
\text { Operating income } & \$ 2,500,000 & \$ 6,000,000 \
\text { Operating assets } & \$ 16,000,000 & \$ 36,000,000
\end{array}$$ Assuming that these are the only divisions of Terra Company,what is the ROI for the company as a whole?
A) 15.7%
B) 16.3%
C) 16.6%
D) 32.3%

Question

Terra Company has two divisions,the Retail Division and the Wholesale Division.The following information was gathered for the two divisions for the current year: $$\begin{array} { l l c } 
& \text { Retail Division } & \text { Wholesale Division } \
\text { Operating income } & \$ 2,500,000 & \$ 6,000,000 \
\text { Operating assets } & \$ 16,000,000 & \$ 36,000,000
\end{array}$$ Assuming that these are the only divisions of Terra Company,what is the ROI for the company as a whole?
A) 15.7%
B) 16.3%
C) 16.6%
D) 32.3%

Quizplus · Accepted Answer

The ROI (Return on Investment) for the company as a whole is calculated by dividing the total operating income by the total operating assets. Total operating income is $2,500,000 + $6,000,000 = $8,500,000. Total operating assets are $16,000,000 + $36,000,000 = $52,000,000. ROI = $8,500,000 / $52,000,000 = 0.163 or 16.3%.

Terra Company Has Two Divisions,the Retail Division and the Wholesale