Department A shows an annual after-tax profit of $400,000 from invested assets of $12 million. Department B shows an annual after-tax profit of $400,000 from invested assets of $8 million. Which unit had the best financial performance? A) Department A performed the best. B) Department B performed the best. C) Both departments had the same financial performance. D) Performance cannot be determined from these statistics.

Question

Jamar Wiggins

Business

17 June, 17:05

Department A shows an annual after-tax profit of $400,000 from invested assets of $12 million. Department B shows an annual after-tax profit of $400,000 from invested assets of $8 million. Which unit had the best financial performance? A) Department A performed the best. B) Department B performed the best. C) Both departments had the same financial performance. D) Performance cannot be determined from these statistics.

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Answers (1)

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Lexi Cline · Answer 1

B) Department B performed the best.

Explanation:

Investment assets are those that we use to produce additional income, or with which we speculate on future income.

So, if department B invested less than department A in those assets, and both had the same taxes during the year, department B has better used the assets in its main mode of business and to generate income.