Essay
For 2012, one division of Ashton Company reported operating assets of $5,000,000 and operating income of $620,000. Ashton has established a target return on investment (ROI) of 14% for the division.
Required:
a) Calculate the division's ROI for 2012. Did it achieve the target set by the company?
b) Assuming that operating assets for 2013 increase by 5%, by how much would operating income have to increase to reach the target of 14%?
Correct Answer:
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a) ROI = $620,000/$5,000,000 = 12.4%. No...View Answer
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