The Following Information Is Available About the Status and Operations

question 121

Essay

The following information is available about the status and operations for Division B of Boxwood Company, which has a minimum required ROI of 20%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division B } \\\text { Divisional investment } & \$ 1,500,000 \\\text { Divisional profit } & \$ 550,000 \\\text { Divisional sales } & \$ 3,600,000\end{array}$$
Required:
a. Compute the ROI for Division B.
b. Division B could increase its profit by $25,000 by increasing its investment by $100,000. Compute its new ROI.
c. Division B could increase its profit margin ratio by one percentage point (for example: from 13% to 14%), without increasing total sales or investment. Compute its new ROI.
d. Division B could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new ROI.

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Definitions:

Valid Method

A research or measurement technique that accurately reflects or measures what it is intended to.

Heritability

Refers to the proportion of variation among individuals that we can attribute to genes. The heritability of a trait may vary, depending on the range of populations and environments studied.

White Middle-Class

A socioeconomic group characterized by individuals of European descent with moderate to high income levels and education.

Japanese Males

A demographic group referring to individuals who are male and of Japanese nationality or descent.