Terra Company Has Two Divisions, the Retail Division and the Wholesale

Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Terra Company has set a target return on investment (ROI) of 15% for both divisions. Based on ROI, which division appears to have performed better?
$$\begin{array} { | l | l | l r | } \hline & { \text { Retail Division } } & { \text { Wholesale Division } } \\\hline \text { Operating income } & \$ 2,500,000 & \$ 6,000,000 \\\hline \text { Operating assets } & \$ 16,000,000 & \$ 36,000,000 \\\hline\end{array}$$

A) Retail division.
B) Wholesale division.
C) Both divisions have the same results.
D) The answer cannot be determined using the information provided.

Correct Answer:

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