A family friend has asked your help in analyzing the operations of three anonymo

Question

A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign.)

COMPANY

A B C

Sales 360,000 800,000 570,000

Net operating income ? $38,000 ?

Average operating assets $153,000 ? $144,000

ROI 20% 17% ?%

Minumum required rate of return ? ? ?

Percentage 17% ?% 14%

Dollar Amount $? $48,000 $?

Residual income $? $? $5,000

FILL IN THE QUESTION MARKS

Explanation / Answer

Solution-

A B C Sales $           360,000 $           800,000 $            570,000 Net Operating income (Avg. Opearting assets*ROI) $             30,600 $           138,000 $               25,160 Calcualtion 153000*0.2 20160+5000 Avg. Operating assets =Operating income/ROI $           153,000 $           811,765 $            144,000 Calcualtion 138000/0.17 ROI =(Opeartain income/Avg. Operating Assests) 20% 17% 17% Calcualtion 25160/144000 Minimum req rate of return % (Avg. opearating assets /ROI $) 17% 35% 14% Calcualtion 48000/138000 $ (Avg. opearating assets*ROI %) 26010                  48,000 20160 Calcualtion 153000*0.17 144000*0.14 Residual income (Net Operatin income-Min rate of return $) $                4,590 $             90,000                     5,000 30600-26010 138000-48000

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