The following information for companies x, y and z is incomplete. Supply the mis
ID: 2567286 • Letter: T
Question
The following information for companies x, y and z is incomplete.
Supply the missing data.
Round your percentage answers to the 1 decimal place
Operating Income
Company X
Company Y
Company Z
Operating Income
$ 220,000.00
Sales
Invested Capital
$ 6,000,000.00
$ 32,000,000.00
Return on Sales
32.0%
%
40.0%
%
%
Capital turnover
20.0%
%
%
30.0%
%
Return on investment
%
20.0%
%
15.0%
%
Minimum acceptable return
10.0%
%
12.0%
%
%
Residual income
$ 960,000.00
The following information for companies x, y and z is incomplete. Supply the missing data. Round your percentage answers to the 1 decimal place Operating Income Company X Company Y Company Z Operating Income $220,000.00 Sales Invested Capital $6,000,000.00 $32,000,000.00 Return on Sales 32.0% % 40.0% % % Capital turnover 20.0% % % 30.0% % Return on investment % 20.0% % 15.0% % Minimum acceptable return 10.0% % 12.0% % % Residual income $960,000.00
The following information for companies x, y and z is incomplete.
Supply the missing data.
Round your percentage answers to the 1 decimal place
Operating Income
Company X
Company Y
Company Z
Operating Income
$ 220,000.00
Sales
Invested Capital
$ 6,000,000.00
$ 32,000,000.00
Return on Sales
32.0%
%
40.0%
%
%
Capital turnover
20.0%
%
%
30.0%
%
Return on investment
%
20.0%
%
15.0%
%
Minimum acceptable return
10.0%
%
12.0%
%
%
Residual income
$ 960,000.00
Explanation / Answer
Companys Company X Company Y Company Z Operating Income 220000 1200000 4800000 Sales 687500 3000000 9600000 Invested Capital 3437500 6000000 32000000 Return on Sales 32.00% 40.00% 50.00% Capital turnover 20.00% 50.00% 30.00% Return on investment 6.40% 20.00% 15.00% Minimum acceptable return 10.00% 12.00% 12.00% Residual income -123750 480000 960000 For Company X: Calculation Used Explanation Sales 220000/32% Return on Sales= Operating Income/Sales Invested Capital 687500/20% Capital Turnover=Sales/Invested Capital Return on investment 220000/687500 Return on investment=Operating Income/Sales Residual income 3437500(6.40%-10%) Residual income=Invested Capital(Return on Investment-Min Acceptable Return) For Company Y: Calculation Used Explanation Operating Income 6000000*20% Operating Income=Invested Capital*ROI Sales 1200000/40% Sales=Operating Income/Return on Sales Capital Turnover Ratio 3000000/6000000 Capital Turnover Ratio=Sales/Invested Capital Residual income 6000000(20%-12%) Residual income=Invested Capital(Return on Investment-Min Acceptable Return) For Company Z: Calculation Used Explanation Minimum acceptable return See Working Note Residual income=Invested Capital(Return on Investment-Min Acceptable Return) Sales 32000000*30% Sales=Invested Capital*Capital Turnover Ratio Return on Sales 4800000/9600000 Return on Sales=Operating Income/Sales Operating Income See Working Note Working Note for Company Z: 960000= Invested Capital(Return on Investment-Min Acceptable Return) 960000= 32000000(15%-X) 3% (15%-X) X 12% Minimum acceptable return 12% Residual Income 960000 Residual Income 3% Operating Income 960000/3%*15% Operating Income 4800000
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