The Mega Division of Green Corporation is an investment center. It has $1,000,000 of operating assets....
The Mega Division of Green Corporation is an investment center. It has $1,000,000 of operating assets. During 2018, the Mega Division earned operating income of $300,000 on $6,000,000 of sales. Green’s companywide return on investment or desired rate of return is approximately 10%
Please Show Work, and No excel sheets:
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What is the ROI?______________________
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What is the margin? ____________________
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What is the turnover? _____________________
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What is the residual income? _______________
Homework Answers
ROI = Net operating income / Operating assets
= 300,000 / 1,000,000
= 30%
Margin = Net operating income / Sales
= 300,000 / 6,000,000
= 5%
Turnover = Sales / operating assets
= 6,000,000 / 1,000,000
= 6 times
Residual income = Operating income - required return on investment
= 300,000 - (1,000,000 * 10%)
= 200,000
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The Mega Division of Green Corporation is an investment
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Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,920,000
$
28,920,000
$
26,150,000
Average operating assets
$
3,230,000
$
7,230,000
$
5,230,000
Net operating income
$
516,800
$
462,720
$
758,350
Minimum required rate of return
7.00
%
7.50
%
14.50
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
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Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,920,000
$
28,920,000
$
26,150,000
Average operating assets
$
3,230,000
$
7,230,000
$
5,230,000
Net operating income
$
516,800
$
462,720
$
758,350
Minimum required rate of return
7.00
%
7.50
%
14.50
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
2.
Gabbe Industries is a division of a major corporation. Last year the division had total sales of $19,293,750, net operating income of $2,267,016, and average operating assets of $8,575,000. The company's minimum required rate of return is 20% Required: a. What is the division's margin? (Round your percentage answer to 2 decimal places.) b. What is the division's turnover? (Round your answer to 2 decimal places.) c. What is the division's return on investment (ROI)? (Round percentage your answer...
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