Arboretum Hybrid Greenery Company is assessing the performance of the Georgia outlet for the years 2011 and 2012. In 2011, the operating income for the outlet was $450,000 while in 2012 it was $390,000
In 2011 gross book value of total assets held by the Georgia outlet was $2,400,000 while in 2012 it was $2,160,000. The accumulated depreciation of total assets for 2011 and 2012 was $600,000.
Required
Compute the 2011 and 2012 ROI using the net book value of total assets.
A) 25%; 25%
B) 13%; 22%
C) 15%; 10%
D) 30%; 12%
E) 22%; 15%
A
Explanation: A) 2011: $450,000 = 0.25 or 25%
($2,400,000 - $600,000 )
2012: $390,000 = 0.25 or 25%
($2,160,000 - $600,000 )
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