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Return on Investment The income from operations and the amount of invested assets in each division...

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 $52,200 $290,000
Commercial Division 46,400 290,000
Internet Division 117,600 840,000

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?
Retail Division

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Homework Answers

Answer #1

Answer a - The return from investment can be calculated (in percentage) using the following formula :

The following table gives the value of the ROI using the above formula :

Answer b - The most profitable division per dollar invested is Retail Division.

Reason : It gives ($1 * 18% = $0.18 per dollar invested) as compared to Commercial ($1 * 16% = $ 0.16) and Internet ($1 * 14% = $0.14), which give lower income per dollar invested.

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