Borraw Company
The following information pertains to the three divisions of Borraw Company: $\begin{array}{lll}&\text { Division } A & \text { Division } B\
\text { Sales } & ? & 1,250,000 \
\text { Net operating income } & \$ 25,000 & \$ 75,000 \
\text { Average operating assets } & ? & ? \
\text { Rebum on investment } & 20 \% & 15 \% \
\text { Margin } & 0.05 & ? \
\text { Tumover } & ? & ? \
\text { Target ROI } & 12 \% & 10 \%
\end{array}$
-Refer to Borraw Company. What are the average operating assets for Division B?
A) $75,000
B) $187,500
C) $500,000
D) $1,250,000

Question

Quizplus · Accepted Answer

The return on investment (ROI) is calculated as Net Operating Income / Average Operating Assets. For Division B, ROI is 15%, and Net Operating Income is $75,000. Thus, $75,000 / Average Operating Assets = 0.15, which gives Average Operating Assets = $500,000.

Borraw Company the Following Information Pertains to the Three Divisions

Borraw Company
the Following Information Pertains to the Three Divisions