signment 10-1 Week 10 Practice Saved Help Save & Exit 3 Check my Meiji Isetan Co

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signment 10-1 Week 10 Practice Saved Help Save & Exit 3 Check my Meiji Isetan Corp. of follow Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions Division ints Osaka Yokohama Sales $9,100,000 $21,000,000 Net operating income 455, 000 1,470,000 Average operating $2,275,000 $10, 500,000 assets eBook Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover References 2. Assume thet the division is 12%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed company evaluates performance using residual income and that the minimum required rate of return for any Complete this question by entering your answers in the tabs below Required 1Required 2 Required 3 For each division, compute the return on investment (ROI) in terms of margin and turnover

Explanation / Answer

OSAKA YOKOHAMA Sales 9,100,000 21,000,000 Net Operating Income 455,000 1,470,000 Average Operating assets 2,275,000 10,500,000 Margin % 5% 7% (Net Operating income/Sales*100) Turnover ratio 4 2 (Sales/ Average Operating Assets) ROI 20% 14% (Margin %*Turnover) OSAKA YOKOHAMA Average Operating Assets 2,275,000 10,500,000 Required rate of return 12% 12% Sales 9,100,000 21,000,000 Net Operating Income 455,000 1,470,000 Less: Required Income 273000 1260000 (Average assets*Required rate) Residual income 182,000 210,000 Yokohama Greater amount of residual income an indication that is better managed NO

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