Scribe Company, a manufacturer of writing instruments, provides the following financial information: Pen Division Pencil Division Operating income $ 100 comma 000 $ 40 comma 000 Net sales $ 500 comma 000 $ 175 comma 000 Total assets at Jan. 1 $ 560 comma 000 $ 300 comma 000 Total assets at Dec. 31 $ 610 comma 000 $ 275 comma 000 Calculate the return on investment for the Pencil Division. (Round your answer to two decimal places.)

Question

Business

Joel Wilson

9 December, 10:38

Scribe Company, a manufacturer of writing instruments, provides the following financial information: Pen Division Pencil Division Operating income $ 100 comma 000 $ 40 comma 000 Net sales $ 500 comma 000 $ 175 comma 000 Total assets at Jan. 1 $ 560 comma 000 $ 300 comma 000 Total assets at Dec. 31 $ 610 comma 000 $ 275 comma 000 Calculate the return on investment for the Pencil Division. (Round your answer to two decimal places.)

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Answers (1)

Know the Answer?

Robert Gaines · Answer 1

The return on investment for the Pencil Division is 14,55% (two decimal places.)

Explanation:

The Return on Investments is calculated as;

Return on Investments = Divisional Profit Contribution / Assets Employed in the Division

= $40,000 / $275,000 * 100

= 14,545454 or 14,55% (two decimal places.)

Conclusion:

The return on investment for the Pencil Division is 14,55% (two decimal places.)