Dupont performance analysis and residual income

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Reference no: EM13356291

DuPont performance analysis and Residual Income analysis.

Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected information is presented here.

	*Division A*	*Division B*	*Division C*
Revenues...................	500,000	?	?
Operating Income.........	$ 60,000	?	$ 80,000
Operating Assets............	$ 250,000	$ 600,000	?
Margin __________________	?	12%	?
Turnover _______________	?	1 turn	2 turns
ROI _____________________	?	?	?
Residual income	?	?	$ 20, 000

Required:

a. Calculate the missing amounts for each division.

b. Comment on the relative performance of each division.

c. Provide an example to show how residual income improves decision making at the divisional level.

DuPont Performance Analysis:	Division A	Division B	Division C
Revenues..........................................	$500,000
Operating Income................................	$60,000		$80,000
Operating Assets.................................	$250,000	$600,000
Margin...........................nbsp;		12%
Turnover ...........................		1 turn	2 turns
ROI ...........................
Residual Income Analysis:
Operating Income................................	$60,000		$80,000
Required ROI (Operating assets x 12%).....	30,000	72,000
Residual Income..................................			$20,000

b.--------------

c.--------------

Reference no: EM13356291

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