Question

Carter Company reported the following financial numbers for one of its divisions for the year, average assets of $4,240,000; soles of $4,665,000; cost of goods sold of $2,690,000; and operating expenses of $1,512,000. Compute the division's return on investment:

Muniple Choice
a. 9.92%
b. 10.92%
c. 17.21%
d. 23.44%
e. 6.62%

Answer 1

(b) 10.92%

Step-by-step explanation:

The formula for calculating return on investment (ROI) is:

ROI = (Net Income / Average Total Assets) x 100%

We need to calculate the net income first:

Net Income = Sales - Cost of Goods Sold - Operating Expenses

Net Income = $4,665,000 - $2,690,000 - $1,512,000

Net Income = $463,000

Now, we can calculate the ROI:

ROI = (Net Income / Average Total Assets) x 100%

ROI = ($463,000 / $4,240,000) x 100%

ROI = 10.92%

Therefore, the answer is (b) 10.92%.