Question

Twenty years ago, Andrea and Mary purchased a group of salons that are located in several cities. Andrea had a 70% interest and Mary 30%. Two years ago, Mary decided to sell her complete interest in all the salons to Jake. Andrea serves as CEO delegating the day to day operations to Jake who is the VP of Operations. Jake has two direct reports, Jamie and Gary. Jamie, who has been with the company for many years is responsible for the Wrentham, Milford and Franklin locations. To help her with her work load, she has an assistant, Jerry, who does a lot of the day-to-day work. Gary, is responsible for the Portland and Stamford locations and has an assistant, Tammy. Neither Jerry nor Tammy have anyone working for them.

Based on the current executive compensation plan, managers can earn a bonus based on meeting a having a positive residual income. At this point, Andrea is proposing a change in the executive compensation to have bonuses computed based on profit. To aid her in this analysis Andrea asked an accountant to summarize key financial results from the prior year as shown below:

	Wrentham	Milford	Franklin	Portland	Stamford
Revenue	$900,000	$525,000	$450,000	$950,000	$900,000
Net operating income	$45,000	$42,000	$31,500	$57,000	$45,000
Average operating assets	$450,000	$350,000	$250,000	$593,750	$400,000
Stockholders’ equity	$382,500	$297,500	$212,500	$504,688	$340,000
Residual income (loss)	($4,500)	?	?	?	?
Margin	?	?	?	?	?
Turnover	?	?	?	?	?
ROI	?	?	?	?	?
RI	?	?	?	?	?

Required: Answer each of the following questions associated with the information provided. In answering the numerical questions round your final answer to at least two decimal points. For example, a margin of 10.4115% would be 10.41%. A turnover of 3.3621 would be 3.36.

6.	Wrentham Margin is
7.	Wrentham Turnover is
8.	Milford Margin is
9.	Milford Turnover is
10.	Franklin Margin is
11	Franklin Turnover is
12.	Portland Margin is
13.	Portland Residual Income is
14.	Stamford Margin is
15.	Stamford Turnover is

Answer 1

Answer with working is given below