Du Pont's 2000 segment reporting showed that Polyester had sales of $2,553 & operating income of $73, while Specialty Fibers had sales of $3,452 & operating income of $690.

This indicates that:

a) Specialty fibers had a higher operating return than Polyester (20.0% vs. 2.9%).

b) Polyester had a higher operating return than Polyester.

c) Du Pont should discontinue Specialty fibers & concentrate exclusively on Polyester.

d) Polyester had an operating return of over 30%.

Question

Victoria Hardy

Business

20 January, 02:03

Du Pont's 2000 segment reporting showed that Polyester had sales of $2,553 & operating income of $73, while Specialty Fibers had sales of $3,452 & operating income of $690.

This indicates that:

a) Specialty fibers had a higher operating return than Polyester (20.0% vs. 2.9%).

b) Polyester had a higher operating return than Polyester.

c) Du Pont should discontinue Specialty fibers & concentrate exclusively on Polyester.

d) Polyester had an operating return of over 30%.

+2

Answers (1)

Know the Answer?

Natalya Lang · Answer 1

The correct answer is option (a).

Explanation:

According to the scenario, the given data are as follows:

Sales of polyester = $2,553

Operating income = $73

So, Operating return on polyester = (Operating income : Sales of polyester) * 100

= ($73 : $2,553) * 100

= 2.86% or 2.9%

Now Sales of fiber = $3,452

Operating income = $690

So, Operating return on fiber = (Operating income : Sales of fiber) * 100

= ($690 : $3,452) * 100

= 19.99% or 20%