ASARIA, JEROWNE CEIZAR

GALLATO, PJ

1.

₱ 24,950
Booboo Division = = 0.079 x 100 = 7.99% or 8%
₱ 311,900
₱ 17,500
Splint Division = = 0.098 x 100 = 9.83% or 10%
₱ 177,950
₱ 28,500
Intensive Care Division= = 0.06 x 100 = 6%
₱ 475,000
The company should review and stop its plan to award the Intensive Care Division. Based on the data
being computed in the three divisions, although the Intensive Care Division has a high operating profit
among the three divisions, it does not mean that it has the highest return on investment among the
three. The intensive Care Division has a higher total amount of assets than the two divisions, yet it still
only generates 6% operating profit of its total assets. On the other hand, the award should be given to
the Splint Division because even though they had a lesser operating profit than the Intensive Care
Division, the Splint Division's return on investment is much higher among the three divisions. It shows
here that it has a 9.83%, or 10% if rounded off, return on investment compared to the two. The Splint
division has the highest return on investment among the three divisions and should be awarded based
on the concept of relying on its high operating profit.

2.

Income
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 =
Average Total Asset

Beginning balance+ending balance

Average total asset =
2
1,000,000+ 2,000,000
=
2
= 1,500,000

₱ 20,000,000
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 = = 13.33 X 100 = 1333% or 1333.13%
₱ 1 , 5 00,000

The company's return on assets is 1333.13% or 1333% if rounded off. Based on the given scenario, we
have computed to total average assets by adding the beginning and ending assets, then dividing it by
two since it has two periods. By dividing the income of 20,000,000 to the total average assets of
1,500,000, we have computed that the company has a 1,333.13%. This means that the company has
profited a thousand times more than its total assets.

3.

P 25,000
𝐷𝑒𝑏𝑡 𝑅𝑎𝑡𝑖𝑜 = = 0.005 x 100 = 0.50%
P 5,000,000