1. Here are data regarding Acme Corporation’s European Division:
Average operating assets $300,000
Sales revenue $400,000
Net operating income $60,000
Minimum required rate of return 14%
Compute the European Division’s: a. Turnover ___________ b. Margin ____________ c. Return on investment ____________ d. Residual income __________________
Average operating assets = $300,000
Sales revenue = $400,000
Net operating income = $60,000
Minimum required rate of return = 14%
a. Turnover = Sales revenue/Average operating assets
= 400,000/300,000
= 1.33 times
b. Margin = Net operating income/Sales revenue
= 60,000/400,000
= 15%
c. Return on investment = Net operating income/Average operating assets
= 60,000/300,000
= 20%
D. Residual income = Net operating income - (Average operating assets x Minimum required rate of return)
= 60,000 - (300,000 x 14%)
= 60,000 - 42,000
= $18,000
kindly give a positive rating if you are satisfied with the solution. do comment if you have any query, Thanks.
1. Here are data regarding Acme Corporation’s European Division: Average operating assets $300,000 Sales revenue $400,000...