Suppose the Operating Asset Turnover Ratio Increased by 35% and the Margin

question 1

Multiple Choice

Suppose the operating asset turnover ratio increased by 35% and the margin increased by 25%.What would be the effect on the divisional ROI?

• A)It would increase by 69%.
• B)It would decrease by 60%.
• C)It would increase by 20%.
• D)It would decrease by 50%.

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Definitions:

Acquisition-Date Fair Value

The worth of an asset or company at the exact date it is acquired by another entity, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consolidation

The process of combining the financial statements of separate subsidiaries or companies to form a single comprehensive financial statement.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares rather than cash.

Investment

Investment is the allocation of resources, usually money, in the expectation of generating an income or profit, such as purchasing securities or assets.