Mastery Problem Return on Investment, margin, and turnoverReturn .docx

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Mastery Problem: Return on Investment, margin, andturnoverReturn on Investment (ROI)The manager of an investment center should be evaluatedbased on revenues, costs, and investments. An evaluationbased on net income ignores the amount of investment theinvestment center required. One way to measure operatingprofit in relation to investment is a calculation called thereturn on investment.ROI is effective because it takes into consideration the threefactors under the control of an investment center manager:revenues, costs, and investments. ROI measures the income(or return) earned on each dollar of investment.APPLY THE CONCEPTS: Calculating return on investmentThe divisional income statements for three divisions of theDuvall Company are shown.Additional financial data from the three divisions of theDuvall Company are shown.Calculate the return on investment for each division. Ifrequired, round the ROI to the nearest hundredth of a percent(for example, 16.943% would be rounded to 16.94%).

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Term
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