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    Computing and Interpreting Return on Investment (ROI)

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    Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as $):

    Division

    Queensland New South Wales
    Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000,000 $7,000,000
    Average operating assets . . . . . . . . . . . . . . . . $2,000,000 $2,000,000
    Net operating income . . . . . . . . . . . . . . . . . . . $360,000 $420,000
    Property, plant, and equipment (net) . . . . . . . . $950,000 $800,000

    1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.
    2. Which divisional manager seems to be doing the better job? Why?

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    https://brainmass.com/business/accounting/computing-interpreting-return-investment-roi-466884

    Solution Preview

    1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.

    ROI = Margin* Turnover
    Margin = Net Operating ...

    Solution Summary

    This solution provides assistance with computing and interpreting the return on a particular investment.

    $2.19

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