Reference no: EM132533966
Question 1: Eban Wares is a division of a major corporation. The following data are for the latest year of operations:
Sales ................................................................................. $10,890,000
Net operating income ...................................................... $609,840
Average operating assets ................................................. $3,000,000
The company's minimum required rate of return ........... 16%
Required:
a. What is the division's margin?
b. What is the division's turnover?
c. What is the division's return on investment (ROI)?
d. What is the division's residual income?
Question 2: Given the following data:
Return on investment ................................. 25%
Sales ........................................................... $100,000
Average operating assets ........................... $40,000
Turnover .................................................... 2.5
Minimum required rate of return ............... 18%
Margin on sales ......................................... 10%
Required: Calculate the Residual Income.
Question 3: The following information relates to last year's operations at the Paper Division of Germane Corporation:
Minimum required rate of return ............... 15%
Return on investment (ROI) ...................... 18%
Sales ........................................................... $810,000
Turnover (on operating assets) .................. 5 times
What was the Paper Division's net operating income last year?