The Baily Division Recorded Operating Data as Follows for the Past

question 47

Multiple Choice

The Baily Division recorded operating data as follows for the past two years:

$\begin{array}{|l|r|r|} \hline& \text { Year 1 } & \text { Year 2 } \\\hline \text { Sales } & ? & \$ 1,200,000 \\\hline \text { Shareholders' Equity } & \$ 540,000 & \$ 720,000 \\\hline \text { Average Operating Assets } & \$ 600,000 & ? \\\hline \text { Margin } & 15 \% & ? \\\hline \text { Return on Investment } & 22.5 \% & 18 \% \\\hline\end{array}$
$\text { Baily Division's turnover was exactly the same in both Year } 1 \text { and Year } 2 .$


-What was the margin in Year 2?

• A) 12.00%.
• B) 18.75%.
• C) 22.50%.
• D) 27.00%.

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Definitions:

Vertical Merger

A merger between companies in the same industry but at different stages of the production process, aiming at creating efficiencies or reducing costs.

Consolidation

The process of combining multiple accounts or businesses into a single entity, often for the purpose of simplifying financial statements or achieving operational efficiencies.

Holding Company

A company that owns other companies. A parent company.

Leveraged Buyout

A financial transaction where a company is acquired primarily with borrowed funds, often with the assets of the company being acquired used as collateral for the loans.