Conner Manufacturing has two major divisions. Management wants to compare their relative performance. Information related to the two divisions is as follows:
Management discovers that the ROI is the same for both divisions, and wants a deeper evaluation.
Which division has a higher efficiency in the use of assets to generate sales?
A) Division 1
B) Division 2
C) Both divisions have the same asset utilization ratio

Question

Conner Manufacturing has two major divisions. Management wants to compare their relative performance. Information related to the two divisions is as follows:
  Management discovers that the ROI is the same for both divisions, and wants a deeper evaluation.
Which division has a higher efficiency in the use of assets to generate sales?
A) Division 1 
B) Division 2 
C) Both divisions have the same asset utilization ratio

Quizplus · Accepted Answer

Asset Utilization Ratio: Sales/Investment
Division 1 Asset utilization: $200,000 / $1,000,000 = 0.200
Division 2 Asset utilization: $45,000 / $200,000 = 0.225
Division 2 has a higher asset utilization.

Conner Manufacturing Has Two Major Divisions