Reference no: EM132524273
Uxbridge Company would like to examine the sales margin and asset components of return on investment for three of its divisions and has accordingly prepared the following information:
Division Investment Division OperatingIncome Sales
A $575,000 $75,000 $500,000
B $700,000 $91,000 $542,000
C $1,000,000 $176,000 $763,000
Required:
Question a) Compute each division's return on investment (ROI), sale margin, and turnover.
Question b) Comment on the divisions' relative rankings on the ratios computed in a).
Question c) Compute each divisions' residual income, assuming a required return on investment of 8%.
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