Question

A firm has four branch offices throughout the state. Following are the operating results from last year. K City G City W City S City Branch office sales $300,000 $420,000 $ 540,000 $606,000 Branch office profit 120,000 294,000 318,000 104,000 Average total assets 805,000 914,000 1,650,000 745,000 Which branch had the highest return on investment?

A. K City.
B. G City.
C. W City.
D. S City.

Answer 1

Answer:

                        City K              City G                  City  W              City S

                            $                      $                        $                        $

ROI    

= NP    x 100     120.000 x 100  294,000 x 100  318,000 x 100  104,000 x 100

  ATA                 805,000          914,000             1,650,000         745,000

ROI                      14.91%             32.17%                19.27%              13.96%

Where ROI refers to return on invetment, NP represents net profit and ATA  denotes average total assets.

City G has the highest return on investment.

Explanation:

Return on investment is calculated as the ratio of net profit to average total assets multiplied by 100.