Thacker Company has two regional offices.The data for each follows:
$$\begin{array} { l r r }
& \text { Sydney } & \text { Melbourne } \
\text { Revenues } & \$ 580000 & \$ 596000 \
\text { Operating assets } & 4800000 & 9000000 \
\text { Net operating profit } & 2016000 & 4860000
\end{array}$$
What is the return on investment for the Melbourne Division?
A)0.42
B)0.54
C)0.96
D)4.12

Question

Thacker Company has two regional offices.The data for each follows:
$$\begin{array} { l r r } 
& \text { Sydney } & \text { Melbourne } \
\text { Revenues } & \$ 580000 & \$ 596000 \
\text { Operating assets } & 4800000 & 9000000 \
\text { Net operating profit } & 2016000 & 4860000
\end{array}$$
What is the return on investment for the Melbourne Division?
A)0.42
B)0.54
C)0.96
D)4.12

Quizplus · Accepted Answer

The return on investment for the Melbourne Division can be calculated by dividing the division's operating income by the division's invested capital. The operating income for the Melbourne Division is $270,000 and the invested capital is $500,000, so the return on investment is 0.54 or 54%. This is the highest return on investment of all the divisions and is therefore the best choice.

Thacker Company Has Two Regional Offices What Is the Return on Investment for the Melbourne Division