Solution-Calculate the return on capital employed

Calculate the return on capital employed

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Reference no: EM133015530

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) Calculate the Return on capital employed.

(b) Calculate the Return on sales.

(d) Calculate the Residual income.

Reference no: EM133015530

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Calculate the return on capital employed

Reference no: EM133015530

Reference no: EM133015530

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