Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%. The division's return on investment (ROI) is closest to:

a. 135.5%

b. 6.1%

c. 32.1%

d. 2.4%

Question

Howard Harris

Business

14 January, 13:13

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%. The division's return on investment (ROI) is closest to:

a. 135.5%

b. 6.1%

c. 32.1%

d. 2.4%

+2

Answers (1)

Know the Answer?

Raven Spencer · Answer 1

ROI = Net operating income x 100

Average operating assets

ROI = $1,924,320 x 100

$6,000,000

ROI = 32.1%

The correct answer is C

Explanation:

ROI is the ratio of net operating income to average operating assets multiplied by 100.