The Following Information Is Reported for the Current Year for North

question 8

Multiple Choice

The following information is reported for the current year for North Atlantic Division of XT Enterprises: $$\begin{array} { l r } \text { Sales } & \$ 3,800,000 \\\text { Interest expense } & \$ 250,000 \\\text { Net income } & \$ 500,000 \\\text { Total assets } & \$ 5,000,000 \\\text { Noninterest-bearing current liabilities } & \$ 400,000 \\\text { Cost of capital } & 8 \% \\\text { Required rate of return } & 14 \% \\\text { Tax rate } & 30 \%\end{array}$$ As it relates to investment center evaluation, how much is the division's profit margin, rounded to the nearest whole percentage?

• A)18%
• B)13%
• C)10%
• D)11%

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Definitions:

Comparative Balance Sheets

Financial statements that present the financial position of an entity at different points in time, side by side, to facilitate comparison.