3 Exercise 11-9 Return on Investment (ROI) and Residual Income Relations [LO11-1

Question

3 Exercise 11-9 Return on Investment (ROI) and Residual Income Relations [LO11-1, L011-2] 20 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. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) eBook Company Print 460,000 $840,000 $45,000 $ 680,000 Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: References S 163,000 147,000 18% 201% Percentage 12% 14 | % Dollar amount $58,000 Residual income 4,000

Explanation / Answer

A B C Sales 460000 840000 680000 Net operating income 29340 45000 24580 Average operating assets 163000 225000 147000 Return on investment 18% 20% 17% Minimum required return: Percentage 12% 26% 14% Dollar amount 19560 58000 20580 Residual income 9780 -13000 4000

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