Exercise 11-6 Contrasting Return on Investment (ROID and Residual Income [L011-1
ID: 2513497 • Letter: E
Question
Exercise 11-6 Contrasting Return on Investment (ROID and Residual Income [L011-1, L011-2] Meljl Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow Division Osaka Yo Sales $11,000,000 $40,000,000 Net operating $ 880,0004,000,000 income Average operating $2,750,000 $20,000,000 Required: L For each division, compute the return on investment RO in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18% compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Complete this question by entering your answers in the tabs below Required Required Required For each division, compute the return on investment (ROI) in terms of margin and turnover ROI Required 2 >Explanation / Answer
1) Calculate ROI :
2) Calculate residual income :
No, Yokohama greater residual income is not indication of better management
Osaka Yokahama ROI 32% 20%Related Questions
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