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 sales for Division A?
A) $25,000
B) $125,000
C) $208,333
D) $500,000

Question

Quizplus · Accepted Answer

The return on investment (ROI) for Division A is 20%, and the margin is 0.05. ROI is calculated as Margin x Turnover. Therefore, Turnover = ROI / Margin = 0.20 / 0.05 = 4. Since Turnover = Sales / Average Operating Assets, and ROI = Net Operating Income / Average Operating Assets, we can find Sales = Net Operating Income / Margin = $25,000 / 0.05 = $500,000.

Borraw Company the Following Information Pertains to the Three Divisions

Borraw Company
the Following Information Pertains to the Three Divisions