Selected sales and operating data for three divisions of different structural en

Question

Selected sales and operating data for three divisions of different structural engineering firms are
given as follows:

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round your answers to 2 decimal places.)

Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Round your "Required rate of return" to 2 decimal places.)

Selected sales and operating data for three divisions of different structural engineering firms are
given as follows:

Explanation / Answer

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round your answers to 2 decimal places.)

Margin %   = Net income / sales

Turoover % = Sales / Average operating assets

ROI           = margin %    * Turnover %

Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Round your "Required rate of return" to 2 decimal places.)

$160,000

Residual income = net operating income - ( Average assets * minimum return required)

Margin Turnover ROI Division A 4.1 % 5 20.5 % Division B 8.1 % 2 16.2 % Division C 1.35 % 5 6.75 %

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