Two divisions of Oregano Company (Divisions TX and OY) have the same profit margins. Division TX's investment turnover is larger than that of Division OY (1.2 to 1.0). Operating income for Division TX is $55,000, and operating income for Division OY is $43,000. Division TX has a higher return on investment than Division OY by
A)using operating income as a performance measure
B)comparing the profit margins
C)applying a negotiated price measure
D)using its assets more efficiently in generating sales

Question

Quizplus · Accepted Answer

Division TX's higher investment turnover indicates it uses its assets more efficiently to generate sales, leading to a higher return on investment compared to Division OY, despite having the same profit margins.

Two Divisions of Oregano Company (Divisions TX and OY) Have