value: 10.00 points A family friend has asked your help in analyzing the operati

Question

value: 10.00 points 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. Enter your ROI and Rate of Return Percentage answers to the nearest percentage (i.e., 0.12 should be entered as 12).) Company $680,000 51,000 Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return $420,000 $ 510,000 $156,000 $158,000 171% 20 | % Percentage 13% 11% Dollar amount 41,000 Residual income 6,000

Explanation / Answer

Return on Investment = Net operating income / Average operating assets

Minimum required rate of return dollar amount = Average operating assets * Percentage

Residual income = Net operating income - Minimum rate of return dollar amount

A B C Sales 420,000 680,000 510,000 Net operating income 26,520 (156,000*0.17) 51,000 23,380 (17,380+6,000) Average operating assets 156,000 255,000 (51,000/0.2) 158,000 Return on investment (ROI) 17% 20% 15% (23,380/158,000) Minimum required rate of return : Percentage 13% 16% (41,000/255,000) 11% Dollar amount 20,280 (156,000*13%) 41,000 17,380 (158,000*11%) Residual income 6,240 (26,520-20,280) 10,000 (51,000 - 41,000) 6,000

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