For Year 1,one Division of Apex Company Reported Operating Assets

question 116

Essay

For Year 1,one division of Apex Company reported operating assets of $5,000,000 and operating income of $750,000.Apex has established a target return on investment (ROI)of 14% for the division.
Required:
1)Calculate the division's ROI for Year 1.Did it achieve the target set by the company?
2)Assuming that operating assets for Year 2 increase by 10%,by how much would operating income have to increase to reach the target of 14%?

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Definitions:

Direct Method

A method of preparing the cash flow statement where major classes of gross cash receipts and gross cash payments are disclosed, providing a clear view of cash flow from operating activities.

Service Department

A division within a company responsible for providing support, maintenance, or other services to customers or other departments.

Number of Employees

A count of all individuals working for a company, including full-time, part-time, and temporary workers.

Cafeteria Costs

Expenses related to operating a cafeteria within an organization, including food, labor, and equipment costs.