If a large diversified company has many different divisions, each competing for capital expenditure funds, which of the following statements would be MOST relevant?
A) The division with the lowest assets should have priority for investment funds to allow that division to grow to the scale of the other divisions.
B) The division with the highest operating income should take priority, because it will likely continue to earn the highest operating income for the company.
C) The division with the highest ROI should take priority because it shows that it can produce the highest return per invested dollar.
D) The division with the highest growth rate in assets should be given additional funding.

Question

Quizplus · Accepted Answer

The division with the highest ROI (return on investment) should take priority because it shows that it can produce the highest return per invested dollar. This ensures that the company maximizes its overall profitability and efficiency by investing in the most efficient and profitable division. The other options may not necessarily lead to the best overall results for the company.

If a Large Diversified Company Has Many Different Divisions, Each