Solution-Calculate the return on capital employed

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

(d) Residual income

Reference no: EM133008556

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Calculate the return on capital employed

Reference no: EM133008556

Reference no: EM133008556

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