Question

Two divisions of the Oregano Company (Divisions TX and OY) have the same profit margins. Division TX's investment turnover is larger than that of Division OY (1.2 to 1.0). Income from operations for Division TX is $55,000, and income from operations for Division OY is $43,000. Division TX has a higher return on investment than Division OY by a. applying a negotiated price measure b. using its assets more efficiently in generating sales c. using income from operations as a performance measure d. comparing the profit margins

Answer 1

b. using its assets more efficiently in generating sales

Step-by-step explanation:

The investment turnover reflect the use of the resources available.

Return on Investment/Investment = TO investment

A higher Investment TO means the investment amount had a higher yield.

The TX division was more efficient with the resource given.