1. Which of the following is correct? a. Gross margin ratio = b. Operating margin ratio = C. Profit margin ratio = d. All of the above. 2. Which of the following statements is incorrect? a. No performance measurement system perfectly aligns the manager's and organization's interests. b. Divisional income serves as a useful summary measure of performance. C. Divisional income statements are subject to compliance with generally accepted accounting principles (GAAP). d. When the divisions are different in sizes, the use of financial ratios may improve comparison. 3. Which of the following statements regarding ROI is incorrect? a. Return on investment is the ratio of profits to investment in the asset that generates those profits. b. Return on investment is an effective performance measure for managers with responsibility for asset acquisition, usage, and disposal. C. ROI can be decomposed into operating margin ratio and asset turnover ratio. d. Relating profits to investment provides a scale for measuring performance. The following information is for questions 4 and 5. Hospitability Inc. has two hotels, Sleep Well and Sleep Tight. The following information is available. Division Divisional assets Sales After-tax income Sleep Well $1,200,000 $2,000,000 $200,000 Sleep Tight 2,100,000 3,000,000 270,000 4. What is Sleep Tight's ROI? a. 9.84% b. 10.65% C. 11.72% d. 12.86% 5. What is Sleep Well's asset turnover ratio? a. 167% b. 154% C. 143% d. 137%