Compute the investment turnover and profit margin

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Question - Consider the following data for two divisions of Edan's Food Place:

Northwest Regior

Average Invested Assets 7,000,000.00

Sales Revenue 18,000,000.00

Less: Operating Expenses - 17,460,000.00

Net Operating Income 540,000.00

Required -

1. Compute the investment turnover, profit margin, return on investment, and residual income for each division. Assume a 10% hurdle rate.

2. Explain the relationship between each division's residual income and its return on investment.

Reference no: EM133064665

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