Question

"Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment"

Answer 1

14.7%

Step-by-step explanation:

The computation of the return on investment is shown below:

As we know that

Return on Investment = Net Income ÷Average total assets × 100

where,

Net Income = Sales - Cost of goods sold - Operating expense

= $4,525,000 - $2,550,000 - $1,372,000

= $603,000

And, the Average total assets = $4,100,000

So,

Return on Investment is

= $603,000 ÷ $4,100,000 × 100

= 14.7%