Calculating Return on Total Assets for an Investment Center Is

question 27

Multiple Choice

Calculating return on total assets for an investment center is defined by the following formula for an investment center:

• A) Contribution margin/Ending assets.
• B) Gross profit/Ending assets.
• C) Net income/Ending assets.
• D) Net income/Average invested assets.
• E) Contribution margin/Average invested assets.

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Definitions:

Incremental Annual Revenues

The additional revenue generated from a specific action or decision, measured on an annual basis.

Scrap Value

The estimated resale value of an asset at the end of its useful life, typically associated with machinery, equipment, or vehicles.

Payback Period

The length of time required to recover the cost of an investment or project from its cash flows.

Initial Investment

The initial amount of money invested in a project or startup business.