Register
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Division Operating
259,852 views
31 votes
31 votes
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Division Operating income $ 2,510,000 $ 6,010,000 Operating assets $ 16,100,000 $ 36,100,000 Terra Company has set a target return on investment (ROI) of 14% for both divisions. Based on ROI, which division appears to have performed better

User Little Helper
by
2.6k points

1 Answer

19 votes
19 votes

Answer:

Wholesale Division

Step-by-step explanation:

ROI = Divisional Profit Contribution ÷ Assets employed in the division

therefore,

Retail Division (ROI) = $ 2,510,000 ÷ $ 16,100,000

= 0.15.6 or 15.60 %

and

Wholesale Division (ROI) = $ 6,010,000 ÷ $ 36,100,000

= 0.16.6 or 16.60 %

Conclusion :

Wholesale Division appears to have performed better

User Jfrey
by
2.9k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

1.6m questions

2.0m answers

Other Questions

If the rate of inflation in Japan dramatically increases while the rate of inflation in the United States remains constant, then a. the demand curve for dollars shifts to the left. b. the demand curve
The market value of the equity of Hudgins, Inc., is $582,000. The balance sheet shows $21,000 in cash and $192,000 in debt, while the income statement has EBIT of $93,000 and a total of $137,000 in depreciation
Kylie is risk averse and has $1,000 with which to make a financial investment. She has three options. Option A is a risk-free government bond that pays 5 percent interest each year for two years. Option
Elroy Rocket is entering his senior year as an accounting major and has a number of options for his summer break. His options for the 3 month break follow: (1) Work full time at a local accounting firm
In January of the current year, Dora made a gift of stock to her granddaughter. At the time of the gift, the stock was worth $15,000. Several months later in the same year after the gift, a $500 dividend
Link Copied!