Big Bath Emporium (BBE), a private company based in Toronto, is the city's largest manufacturer and vendor of bathtubs, showers, and sinks. The company sells products direct to consumers, and also sells wholesale to other retailers. A summary of the performance of two divisions for BBE is given below: Assembly Division

Finishing Division

Average operating assets

$2,400,000

$4,000,0000

Net income

480,000

720,000

1.Which division is the better performer according the use of return on investment (ROI)? Why?

2. Suppose the manager of Assembly Division were offered a one-year project that would increase his average operating assets by $1,000,000 and increase profit by $150,000. Would the manager accept the project under the current method of performance evaluation? Why, or why not?

3. Explain in what ways ROI can be used as a performance measurement for this investment analysis.