Question

consider the following data and determine which of the corporate divisions is more profitable. explain your reasoning.
domestic
international
operating income
$ 8,000,000
$ 12,000,000
average total assets
18,000,000
36,000,000
begin by selecting the formula to calculate return on investment (roi), and then enter the amounts to calculate each divisions roi. (enter your answer as a percent rounded to one decimal place x.x%)
roi =

Explanation:

Step1: Recall the ROI formula

ROI = $\frac{\text{Operating income}}{\text{Average total assets}}\times100\%$

Step2: Calculate Domestic ROI

For Domestic: Operating income = $8,000,000$, Average total assets = $18,000,000$
ROI = $\frac{8000000}{18000000}\times100\% \approx 44.4\%$

Step3: Calculate International ROI

For International: Operating income = $12,000,000$, Average total assets = $36,000,000$
ROI = $\frac{12000000}{36000000}\times100\% \approx 33.3\%$

Answer:

Domestic ROI: $44.4\%$, International ROI: $33.3\%$. The Domestic division is more profitable as its ROI ($44.4\%$) is higher than the International division's ROI ($33.3\%$). A higher ROI indicates that the Domestic division is generating more operating income per dollar of average total assets invested.