Calculate the company total assets

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Question - Answer the following independent questions. Support your answers with clearly identified formulas and computation.

a. A company's available data:

Sales $2,500,000

Net operating income 1,500,000

Return on investment 25%

Cost of capital 15%

Calculate the company's total assets. Show your work

b. Using the data from question VI (a), calculate the residual income.

c. An automobile parts 'company has three divisions:

Engines Brakes Windshields

Sales $8,000,000 $9,000,000 $10,000,000

Contribution margin 2,000,000 2,500,000 3,500,000

Operating income 1,500,000 1,500,000 2,750,000

Investment base 12,000,000 14,000,000 16,000,000

The company's desired rate of return is 15%.

a. Compute each divisions' ROI.

b. Compute each divisions' residual income.

c. Rank each division by both ROI and residual income.

d. Explain which division has the best performance in the year and why.

Reference no: EM132656049

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