Find residual income for each division

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Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

                                                           Division
                                                 Osaka          Yokohama

Sales                                $3,000,000         $9,000,000
Net operating income            $210,000       $720,000
Average operating assets       $1,000,000       $4,000,000

Required:

Problem 1. For each division, the return on investment (ROI) in terms of margin and turnover.

Problem 2. Residual income for each division (assuming that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%).

Reference no: EM132728733

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