Reference: 12-12
the Sherlock Division Recorded Operating Data as Follows

question 24

Multiple Choice

Reference: 12-12
The Sherlock Division recorded operating data as follows for the past year: $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 300,000 \\\hline \text { Operating expenses } & 225,000 \\\hline \text { Average operating assets } & 225,000 \\\hline \text { Stockholders' equity } & 80,000 \\\hline \text { Minimum required rate of return } & 20 \% \\\hline\end{array}$$
-In computing the margin in a ROI analysis, which of the following is used in the denominator?

• A)Net operating income.
• B)Residual income.
• C)Average operating assets.
• D)Sales.

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Definitions:

Key-Person Insurance

Key-person insurance is a policy taken out by a business to compensate for financial losses that would arise from the death or extended incapacity of an important member of the business.

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing overall operations, and acting as the main point of communication between the board of directors and corporate operations.

Liability Insurance

Insurance coverage that protects against claims arising from injuries or damage to other people or property.

Cutting Edge Corporation

A hypothetical or referred company known for being at the forefront of innovation within its industry.