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

Question

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

Quizplus · Accepted Answer

The average operating assets for Division B can be calculated using the formula for Return on Investment (ROI), which is ROI = Net Operating Income / Average Operating Assets. Given that Division B has an ROI of 15% and a Net Operating Income of $75,000, we can rearrange the formula to solve for Average Operating Assets: Average Operating Assets = Net Operating Income / ROI = $75,000 / 0.15 = $500,000.

The Following Information Pertains to the Three Divisions of Borraw