4:10 PM ezto.mheducation.com .11 Sprint 2.00 points Meiji Isetan Corp. of Japan

Question

4:10 PM ezto.mheducation.com .11 Sprint 2.00 points Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Osaka Yokohama 9,300,000 $23,000,000 $ 651,000 $2.070.000 S 2,325.000 $11,500,000 Required For each division, compute the return on investment (ROI) in terms of margin and turnover ROI 2Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division. Osaka Average operating assets Net operating income Minimum required return on average Residual income 3. Is Yokohama's greater amount of residual income an indication that it is better managed? O Yes No

Explanation / Answer

Yes it represents better managemana of yokohama division.

Particular osaka yokohama A) NET operating assets 2325000 11500000 B)Net operating income 651000 2070000 C)ROI=a/b*100 28% 18% D)Minimum required return 14% 14% E)Minimum required return on average assets 325500 1610000 F) Residual income =B-E 325500 460000

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