Question

Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $5,800,000; sales of $5,375,000; cost of goods sold of $3,225,000; and operating expenses of $1,147,000. Compute the division's return on investment:

Answer 1

17.30%

Step-by-step explanation:

The computation of the return on investment is shown below

But before that the net income is

Sales $5,375,000

Less: COGS -$3,225,000

Less: Operating Expenses -$1,147,000

Net Income $1,003,000

Now

Return on Investment is

= Net Income × 100 ÷ Average Assets

= $1,003,000 × 100 ÷ $5,800,000

= 17.30%