The following selected data pertain to the belt division of Allen Corp. for last year:

$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 500,000 \
\hline \text { Average Operating Assets } & \$ 200,000 \
\hline \text { Operating Income } & \$ 80,000 \
\hline \text { Turnover } & 2.5 \
\hline \text { Minimum Required Return } & 20 \% \
\hline
\end{array}$

-What was the return on investment?
A) 15%.
B) 16%.
C) 20%.
D) 40%.

Question

The following selected data pertain to the belt division of Allen Corp. for last year:

$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 500,000 \
\hline \text { Average Operating Assets } & \$ 200,000 \
\hline \text { Operating Income } & \$ 80,000 \
\hline \text { Turnover } & 2.5 \
\hline \text { Minimum Required Return } & 20 \% \
\hline
\end{array}$

-What was the return on investment?
A) 15%.
B) 16%.
C) 20%.
D) 40%.

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Operating Income divided by Average Operating Assets. Here, ROI = $80,000 / $200,000 = 0.4 or 40%.

The Following Selected Data Pertain to the Belt Division of Allen