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:
What is the ROI?______________________
What is the margin? ____________________
What is the turnover? _____________________
What is the residual income? _______________
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
The Mega Division of Green Corporation is an investment center. It has $1,000,000 of operating assets....
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