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. Enter your ROI and Rate of Return Percentage answers to the nearest percentage (i.e., 0.12 should be entered as 12).)

A B C

Sales 360000 710000 690000

Net operating income ? 45000 ?

Average operating expense 151000 ? 152000

Return on investment 23 19 ?

minimum required rate of return

% 18 ? 14

$ ? 51000 ?

residual income ? ? 7000

Explanation / Answer

Statement showing computations Particulars A B C Sales                          360,000.00                          710,000.00                          690,000.00 Net Operating Income = Avg Op Assets*ROI or Min return in $ + Residual Income                            34,730.00                            45,000.00                            28,280.00 Average Operating Expense = NOI/ROI                          151,000.00                          236,842.11                          152,000.00 Return on Investment = NOI / Avg Op assets 23% 19% 18.61% Minimum reqd return in % = Min Return in $/Avg Op Assets 18% 21.53% 14% Minimum reqd return in $= Avg OP Assets*Min retrun in %                            27,180.00                            51,000.00                            21,280.00 Residual Income = NOI- Min Reqd return in $                               7,550.00                            (6,000.00)                               7,000.00

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