Canvas Creations Inc. has two separate operating divisions, Paper and Giftware. The paper division makes...
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Accounting
Canvas Creations Inc. has two separate operating divisions, Paper and Giftware. The paper division makes cards and other stationery. The Giftware division manufactures a variety of giftware, such as housewares and other trinkets. The September 30, 2020 financial statements show that the paper division had sales of $1,570,000 and a profit of $634,500. This division had average operating assets of $3,275,800. The Giftware division had sales of $1,856,030 and a profit of $823,400. Their average operating assets were $4,625,750. The company has a policy that all investment must earn a minimum rate of return of 17%. Required: a. Calculate the ROI for each of Canvas Creations' divisions. Round to one decimal place. (6 Marks) b. Which of Canvas Creations division is performing better? Support your decision with a brief explanation. (2 Marks)
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