Question
In: Accounting
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
| Division A | Division B | Division C | |||||||
| Sales | $ | 12,280,000 | $ | 35,350,000 | $ | 20,280,000 | |||
| Average operating assets | $ | 3,070,000 | $ | 7,070,000 | $ | 5,070,000 | |||
| Net operating income | $ | 601,720 | $ | 600,950 | $ | 567,840 | |||
| Minimum required rate of return | 10.00 | % | 10.50 | % | 11.20 | % | |||
Required:
1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.
2. Compute the residual income (loss) for each division.
3. Assume that each division is presented with an investment opportunity that would yield a 11% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?
Solutions
ekkarill92 answered 11 months agoRelated Solutions
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,000,000
$
14,000,000
$
25,000,000
Average operating assets
$
3,000,000
$
7,000,000
$
5,000,000
Net operating income
$
600,000
$
560,000
$
800,000
Minimum required rate of return
14
%
10
%
16
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,600,000
$
35,750,000
$
20,600,000
Average operating assets
$
3,150,000
$
7,150,000
$
5,150,000
Net operating income
$
516,600
$
572,000
$
597,400
Minimum required rate of return
9.00
%
9.50
%
11.60
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
5,100,000
$
9,100,000
$
8,200,000
Average operating assets
$
1,020,000
$
2,275,000
$
1,640,000
Net operating income
$
214,200
$
746,200
$
118,900
Minimum required rate of return
17.00
%
32.80
%
14.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A Division B Division C Sales $ 12,280,000 $ 35,350,000 $
20,280,000 Average operating assets $ 3,070,000 $ 7,070,000 $
5,070,000 Net operating income $ 601,720 $ 600,950 $ 567,840
Minimum required rate of return 10.00 % 10.50 % 11.20 % Required:
1. Compute the return on investment (ROI) for each division using
the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,360,000
$
28,360,000
$
25,450,000
Average operating assets
$
3,090,000
$
7,090,000
$
5,090,000
Net operating income
$
494,400
$
453,760
$
636,250
Minimum required rate of return
7.00
%
7.50
%
12.50
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,120,000
$
28,120,000
$
20,120,000
Average
operating assets
$
3,030,000
$
7,030,000
$
5,030,000
Net operating
income
$
496,920
$
449,920
$
503,000
Minimum required
rate of return
7.00
%
7.50
%
10.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
16,000,000
$
36,000,000
$
20,800,000
Average operating assets
$
3,200,000
$
7,200,000
$
5,200,000
Net operating income
$
752,000
$
576,000
$
540,800
Minimum required rate of return
9.00
%
9.50
%
10.40
%
Required:
1. Compute the margin, turnover, and return on investment (ROI)
for each division.
2. Compute the residual income (loss) for...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are
given as follows:
Division A
Division B
Division C
Sales
$
5,600,000
$
9,600,000
$
8,700,000
Average operating assets
$
1,120,000
$
3,200,000
$
1,740,000
Net operating income
$
263,200
$
835,200
$
169,650
Minimum required rate of return
16.00
%
26.10
%
13.00
%
Required:
1.
Compute the return on investment (ROI) for each division using
the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
6,900,000
$
10,900,000
$
10,000,000
Average operating assets
$
1,725,000
$
5,450,000
$
2,500,000
Net operating income
$
414,000
$
1,090,000
$
325,000
Minimum required rate of
return
19.00
%
20.00
%
16.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division
A
Division
B
Division C
Sales
$12,000,000
$14,000,000
$25,000,000
Average operating
assets
$3,000,000
$7,000,000
$5,000,000
Net operating
income
$600,000
$560,000
$800,000
Minimum required rate of
return
14%
10%
16%
Required:
1. Compute the
return on investment (ROI) for each division using the formula
stated in terms of margin and turnover.
ANSWER: Division A margin
=
__________
...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Explain and discuss Market Efficiency as it relates to capital markets. Why is it important?
- Discuss whether dividends are relevant to investors, in other words, does it make a difference to...
- Explain basic financial terminology, example owner's capital, cost of sales, profit margin, capital and operational budget,...
- Privacy legislation applies specific conditions to the collection, solicitation, storage, access, alteration and disclosure of client...
- Consider the following information regarding the performance of a money manager in a recent month. The...
- A bridge on a small, rural road is designed to hold 10 cars when it is...
- A) Suppose Mexican pesos are selling for $0.0525 per unit and you want to buy 83...
ADVERTISEMENT