The management of Pasama Inc. is evaluating the three segments of the company. Given the data below, which of the following statements is true regarding segment return on assets?

Question

Quizplus · Accepted Answer

To calculate the return on assets (ROA) for each segment, we need to divide the operating income by the total assets of the segment.

ROA for Segment Africa = $8,000/$100,000 = 0.08 or 8%
ROA for Segment Belgium = $10,000/$150,000 = 0.067 or 6.7%
ROA for Segment Canada = $9,000/$120,000 = 0.075 or 7.5%

Therefore, we see that Segment Canada has the highest ROA, and Segment Africa has the lowest ROA. Therefore, choice D is the correct answer. Choices A, B, and C are incorrect as they state that either Segment Africa, Segment Belgium, or Segment Canada has the highest operating income and the highest ROA, neither of which is true. Choice E is incorrect as it states that Segment Belgium has a higher ROA than Segment Canada, which is also false.

The Management of Pasama Inc