Recreation Equipment Company Has Several Divisions Which Are Investment Centers

question 109

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

---

Definitions:

Seniority Model

A system within organizations where decisions regarding promotions, layoffs, and other employment-related matters are made based on an employee's length of service.

Elder Reign

A period or system where the elderly hold significant power, influence, or respect within a community or society.

Centenarians

Individuals who have reached the age of 100 years or older.

Likely

Refers to something that has a high probability of occurring or being true.