Retail Sales and Wholesale Sales Are the Only Divisions of Terra

question 100

Multiple Choice

Retail Sales and Wholesale Sales are the only divisions of Terra Company.The following information was gathered for the two divisions for the current year: $$\begin{array} { l l c } & \text { Retail Division } & \text { Wholesale Division } \\\text { Operating income } & \$ 2,500,000 & \$ 6,000,000 \\\text { Operating assets } & \$ 16,000,000 & \$ 36,000,000\end{array}$$ The company has $1,200,000 in operating assets that are not assigned to either of the divisions and $500,000 in corporate expenses that are not reflected in the information above.Based on this information,what is the ROI for the company as a whole?

• A) 17.7%
• B) 16.9%
• C) 15.0%
• D) The answer cannot be determined using the information provided.

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Definitions:

Commercial Impracticability

A doctrine in contracts law where a party may be relieved from performing under a contract, due to unforeseen and impractical hardships, not within the contemplation of the parties at the time of the contract’s formation.

Perfect Tender Rule

A principle in commercial law that requires the delivery of goods to be exactly as specified in the contract without any deviation.

Substantial Impairment

A significant reduction or weakening in strength, value, or quality of an asset or entity's ability to perform its intended function.

Nonconforming

Refers to goods that fail to meet the specifications or requirements set forth in a contract.