The Following Information Is Available About the Status and Operations

question 106

Essay

The following information is available about the status and operations for Division A of Boxwood Company, which has a minimum required ROI of 20%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division A } \\\text { Divisional investment } & \$ 200,000 \\\text { Divisional profit } & \$ 70,000 \\\text { Divisional sales } & \$ 400,000\end{array}$$
Required:
a. Compute the ROI for Division A.
b. Division A could increase its profit by $16,000 by increasing its investment by $60,000. Compute its new ROI.
c. Division A could increase its profit margin ratio by one percentage point (for example: from 12% to 13%), without increasing total sales or investment. Compute its new ROI.
d. Division A 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:

Receiver

The individual or entity that gets or accepts something sent, given, or communicated to them.

Message

A piece of information or communication sent from one individual or group to another.

Channels

in communication refer to the mediums through which information is transmitted from one entity to another, such as verbal, non-verbal, written, and digital modes.

Messages

Information or communication sent from one person or entity to another, through various means such as speech, writing, or symbols.