Question

Babak Industries is a division of a major corporation. Last year the division had total sales of $19,560,000, net operating income of $1,877,760, and average operating assets of $6,000,000. The division's return on investment (ROI) is closest to: Multiple Choice A. 7.3% B. 23.8% C. 31.3% D. 3.0%

Answer 1

Answer:

Option (C) is correct.

Explanation:

Given that,

Total sales = $19,560,000

Net operating income = $1,877,760

Average operating assets = $6,000,000

Return on Investment (ROI):

= Net operating income ÷ Average operating assets

= ($1,877,760 ÷ $6,000,000) × 100

= 0.31296 × 100

= 31.296% or 31.3%

Therefore, the division's return on investment (ROI) is closest to 31.3%