A family friend has asked your help in analyzing the operations of three anonymo
ID: 2380592 • Letter: A
Question
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your answers to the nearest whole number. Omit the "$" and "%" signs in your response.)
Company
Please help I got stuck !
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your answers to the nearest whole number. Omit the "$" and "%" signs in your response.)
Explanation / Answer
Company
A
B
C
Sales
$ 380,000
$ 740,000
$ 590,000
Net operating income
$ =166000*23% =38180
$ 54,000
$ 23550+6000=29550
Average operating assets
$ 166,000
$ 54000/20% =270000
$ 157,000
Return on investment (ROI)
23%
20%
(29550/157000)*100=18.82%
Minimum required rate of return:
Percentage
17%
=(59000/270000)*100 =21.86%
15%
Dollar amount
$ =166000*17%=28220
$ 59,000
$ =157000*15%=23550
Residual income
$
=38180-28220 = 9960
$
54000-59000 = (5000)
$6,000
Company
A
B
C
Sales
$ 380,000
$ 740,000
$ 590,000
Net operating income
$ =166000*23% =38180
$ 54,000
$ 23550+6000=29550
Average operating assets
$ 166,000
$ 54000/20% =270000
$ 157,000
Return on investment (ROI)
23%
20%
(29550/157000)*100=18.82%
Minimum required rate of return:
Percentage
17%
=(59000/270000)*100 =21.86%
15%
Dollar amount
$ =166000*17%=28220
$ 59,000
$ =157000*15%=23550
Residual income
$
=38180-28220 = 9960
$
54000-59000 = (5000)
$6,000
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