Recreation Equipment Company Has Several Divisions Which Are Investment Centers

question 19

Multiple Choice

Recreation Equipment Company has several divisions which are investment centers. Data for the Boat Division and the Trailer Division are shown here: $$\begin{array} { | l | c | c | } \hline & \text { Boat Division } & \text { Trailer Division } \\\hline \text { Operating income } & \$ 90,000 & \$ 36,000 \\\hline \text { Total assets at Jan 1 } & \$ 670,000 & \$ 230,000 \\\hline \text { Total assets at Dec } 31 & \$ 710,000 & \$ 220,000 \\\hline\end{array}$$ Which of the following statements would be the most meaningful interpretation of this data?

• A) Performance of Boat Division is better than that of Trailer Division because Boat Division has higher assets.
• B) Trailer Division uses its assets more efficiently than Boat Division because it has higher ROI.
• C) Boat Division shows more efficient use of assets than Trailer Division because it has higher operating income.
• D) Boat Division is more financially successful than Trailer Division because it shows an increase in assets

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Definitions:

Pronator Teres

A muscle in the forearm that helps rotate the arm inward and bend the forearm at the elbow.

Subscapularis

A muscle in the shoulder that is part of the rotator cuff, responsible for medially rotating the arm.

Brachialis

A muscle in the upper arm that flexes the elbow joint, positioned beneath the biceps.

Levator Scapulae

A skeletal muscle located at the back and side of the neck, responsible for elevating the scapula (shoulder blade).