Question 1
Breton Corporation's Longboat division's segment margin as a percentage of net sales is 12% for the current reporting period. The division has net sales revenue of $2,500,000. Operating assets were $800,000 at the beginning of the period and $1,200,000 at the end. What is the division's ROI?
◦ 10%
◦ 30%
◦ 15%
◦ 12%
Question 2
Cleopatra Corporation's Lingerie division has a segment margin of $729,000 and net sales revenue of $5,400,000 for the current reporting period. Average total assets for the period were $3,375,000. The division manager is considering implementing a new inventory system which would reduce inventory by $675,000. Assuming no change in sales or segment margin, the projected ROI with the reduction in inventory would be
◦ 20%.
◦ 13.5%.
◦ 21.6%.
◦ 24%.