xercises Help Save& Exit Submit Check my work the two divisions follow: Osaka Sa

Question

xercises Help Save& Exit Submit Check my work the two divisions follow: Osaka Sales 9,700,000 27,000,000 76,000 2,700,000 Average operating assets 2,425,000 13,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Assume that the company evaluates performance using division is 17%. Compute the residual income for each division. residual income and that the minimum required rate of return for Osaka Residual income Prev 40f 5EE? Next > acBogk Air

Explanation / Answer

1 Osaka: Margin 8.00% =776000/9700000 Turnover 4.00 =9700000/2425000 ROI 32.00% =8%*4 Tokohama: Margin 10.00% =2700000/27000000 Turnover 2.00 =27000000/13500000 ROI 20.00% =10%*2 2 Residual income: Osaka 363750 =776000-(2425000*17%) Tokohama 405000 =2700000-(13500000*17%) 3 No, greater amount of residual income is not an indication that it is well managed

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