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 | $103,400 | 470,000 | ||
| Commercial Division | 53,200 | 280,000 | ||
| Internet Division | 126,000 | 700,000 | ||
a. Compute the rate of 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?
Solution;
Rate of Return on Investment = Income from Operations / Invested Assets X 100
After putting the values in formula;
Retail Division;
Rate of Return on Investment = $103,400 / $470,000 X 100 = 22%
Commercial Division;
Rate of Return on Investment = $53,200 / $ 280,000 X 100 = 19%
Internet Division;
Rate of Return on Investment = $126,000 / 700,000 X 100 = 18%
|
Division |
Percent |
|
Retail Division |
22% |
|
Commercial Division |
19% |
|
Internet Division |
18% |
Answer:
As described above that Retails division has highest rate of return on Investment i.e 22% as compare to other division, so “Retail Division” is the most profitable per dollar invested.
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