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objective 23 2 1 managers usually use the return on investment to evaluate a the 4301100

 

Objective 23.2

 

1) Managers usually use the return on investment to evaluate ________.

A) the performance of a subdivision

B) the accounting principles followed

C) the size of the investment

D) the balance of working capital

 

2) The return on investment is usually considered the most popular approach to measure performance because ________.

A) it blends all the ingredients of profitability into a single percentage

B) once determined, there is no need to use it with other measures of performance

C) it throws light on the company's working capital

D) it measures the cash balance of the company in the most efficient manner

 

3) Return on investment can be increased by ________.

A) increasing current assets

B) decreasing total assets

C) decreasing revenues

D) increasing the debt portion of the capital

 

4) The ________ method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues.

A) Balanced Scorecard

B) Residual-Income

C) DuPont

D) Economic Value Added

5) Aaron Corp's net income is $25,000. What is the amount of the investment if the return on investment is 20%?

A) $50,000

B) $100,000

C) $125,000

D) $250,000

 

6) Zenith Corporation's net income is $78,400. What is the return on investment if the amount of the investment is $500,000?

A) 14.88%

B) 12.78%

C) 15.68%

D) 16%

 

7) Bouvous Corporation had the following information for 2015:

Revenue$ 400,000

Operating expenses350,000

Total assets500,000

 

What is the return on investment?

A) 10%

B) 20%

C) 25%

D) 18.2%

8) Aeralia Inc., has two regional offices. The data for each are as follows:

 

MarylandNew Jersey

Revenues$ 290,000$ 298,000

Operating assets2,500,0004,500,000

Net operating income1,000,0001,200,000

 

What is the Maryland Division's return on investment?

A) 40%

B) 54%

C) 12%

D) 3.57%

 

9) Bouvous Corp has two regional offices. The data for each are as follows:

 

MarylandNew Jersey

Revenues$ 290,000$ 300,000

Operating assets2,400,0004,500,000

Net operating income1,008,0001,500,000

 

What is the return on investment for the New Jersey Division?

A) 21%

B) 33.33%

C) 66.67%

D) 25%

Answer the following questions using the information below:

 

The Cybertronics Corporation reported the following information for its Cyclotron Division:

 

Revenues$2,000,000

Operating costs1,200,000

Operating assets1,000,000

 

Income is defined as operating income.

 

10) What is the Cyclotron Division's investment turnover ratio?

A) 2.00

B) 3.33

C) 2.50

D) 0.80

 

 

 

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