A family friend has asked your help in analyzing the operations of three anonymo

Question

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.) Company S 810,000 S 36,000 Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: 440,000 S 500,000 S 167,000 S 158,000 2296 20 % Percentage 171% 13% Dollar amount 48,000 Residual income 5,000

Explanation / Answer

Formulas use in Calculation :-

Net Operating Income = Average Operating Assets * Return on Investment

Return on Investment = Net Operating Income / Average Operating assets

Minimum Required Rate of Return(%) = Minimum Required Rate of Return (Dollars) / Average Operating Assets

Residual Income = Net Operating Income - Minimum Required Rate of Return

Particulars A B C Sales $440000 $810000 $500000 Net Operating Income $36740 $36000 $25540 Average Operating Assets $167000 $180000 $158000 Return on Investment (ROI) 22% 20% 16.16% Minimum Required Rate of Return Percentage 17% 26.67% 13% Dollar Amount $28390 48000 $20540 Residual Income $8350 (12000) 5000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.