Calculate the return on capital employed

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Reference no: EM133008556

Question - The directors of Donny Co are reviewing the performance of two of its divisions. The following information is available for the year ending 31 March 2009.

 

South division $000

North division

$000

Sales

50,000

3,200

Operating profit

700

840

Capital employed

3,500

4,000

Cost of capital

12%

12%

South division is a food retailer that sells low priced food from a number of stores that are rented on short-term contracts. North division sells luxury motor vehicles, which it manufactures in a fully automated production plant.

Required - Calculate the following performance measures for the two divisions (to 1 decimal place):

(a) Return on capital employed

(b) Return on sales

(c) Asset turnover

(d) Residual income

Reference no: EM133008556

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