ACCT 2332 I need help with the following question: value 20.00 points Meiji lset

Question

ACCT 2332

I need help with the following question:

value 20.00 points Meiji lsetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Sales Net operating income Average operating assets Yokohama $ 9,800,000 $28,000,000 S 588,000 S 2,240,000 $ 2,450,000 $ 14,000,000 Required 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations. Enter your answers as a percent (i.e., 0.12 should be entered as 12).) Osaka Yokohama ROI 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division. Osaka Yokohama Average operating assets Net operating income Minimum required return on average assets Residual income 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Yes No

Explanation / Answer

1) Calculate ROI :

Calculate residual income :

3) No, Yokohama's greater amount of residual income an indication that it is better managed

Osaka Yokohama Net operating income 588000 2240000 Average operating assets 2450000 14000000 ROI 24% 16%

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