Question

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%. The division's return on investment (ROI) is closest to:

Answer 1

7.6%

Step-by-step explanation:

Calculation for what The division's return on investment (ROI) is closest to:

Using this formula

Margin = Net operating income ÷ Sales

Let plug in the formula

Margin=$1,924,320/$25,320,000

Margin=0.076*100

Margin=7.6%

Therefore The division's return on investment (ROI) is closest to:7.6%