Two Divisions of Crowson Company (Divisions X and Y)have the Same

question 15

Multiple Choice

Two divisions of Crowson Company (Divisions X and Y) have the same profit margins.Division X's investment turnover is larger than that of Division Y (1.2 to 1.0) .Which of the following statements is true?

• A)Division Y will have a higher return on investment as it is using its assets more efficiently in generating sales.
• B)Division X will have a higher return on investment as it is generating more income from its operations.
• C)Division X will have a higher return on investment as it is using its assets more efficiently in generating sales.
• D)Division Y will have a higher return on investment as it is generating more income from its operations.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument as stated by the issuer.

Legal Significance

Refers to the importance or implications of something within the realm of the law, often determining how legal documents, decisions, or actions are interpreted and enforced.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Preferred Stock

A class of stock that entitles holders to fixed dividend payments before any distributions are made to common stockholders.