Return on Investment
The income from operations and the amount of invested assets in each division of Beck Industries are as follows:
| Income from Operations | Invested Assets | |||
| Retail Division | $80,000 | $400,000 | ||
| Commercial Division | 171,600 | 780,000 | ||
| Internet Division | 55,500 | 370,000 | ||
a. Compute the return on investment for each division. (Round to the nearest whole number.)
| Division | Percent |
| Retail Division | % |
| Commercial Division | % |
| Internet Division | % |
b. Which division is the most profitable per dollar invested?
a.
Return on investment, Retail division = Income from Operations/Invested assets
= 80,000/400,000
= 20%
Return on investment, Commercial division = Income from Operations/Invested assets
= 171,600/780,000
= 22%
Return on investment, Internet division = Income from Operations/Invested assets
= 55,500/370,000
= 15%
b.
Commercial division is the most profitable per dollar invested, as it has higher Return on investment .
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