Dickinson Inc. presents financial data for 2017 below: Required: 1. Compute the

Question

Dickinson Inc. presents financial data for 2017 below:

Required:

1. Compute the company's capital turnover for 2017. Enter the number with four decimal places; e.g., 1.5. (1 point)

2. Compute the company's return on investment (ROI) for 2017. Enter the answer with three decimal places; e.g., 0.308. (1 point)

3. What if the board of directors had set a minimum required rate of return of 15% for the company. What was the company's residual income for 2017? Enter the number without commas, rounded to whole dollars. (1 point)

4. What if the board decides to raise its minimum required rate of return to 20%. What is the company's residual income under that scenario? Enter the number without commas, rounded to whole dollars. (1 point)

Explanation / Answer

1 Capital turnover = Net sales / total assets Net sales 4058300 Total assets 1650000 Capital turnover 2.4596 2 Return on investment = operating income / amount invested Operating income 413300 Average invested assets 1650000 Return on investment 0.250 3 Residual income = Operating income - ( Required rate * total assets) Operating income 413300 Minimum rate 15.00% Amount invested 1650000 Minimum rate *amount invested 247500 Residual income 165800 4 Residual income = Operating income - ( Required rate * total assets) Operating income 413300 Minimum rate 20.00% Amount invested 1650000 Minimum rate *amount invested 330000 Residual income 83300

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