Business, 17.04.2020 16:19 yay47

Using ROI and RI to evaluate investment centers

Unbelievable Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and inline skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport; Snow sports and Non-snow sports. The following divisional information is available for the past year:

Net Sales ($) Operating Income ($) Average Total Assets ($) ROI
Snow Sports 5,500,000 935,000 4,500,000 20.8%
Non-snow
Sports 8,400,000 1,428,000 6,700,000 21.3%
Unbelievable Sports management has specified a 16% target rate of return.

Calculate each division's profit margin ratio. Interpret your results in a few sentences.

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Using ROI and RI to evaluate investment centers

Unbelievable Sports Company makes snowbo...