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 ROl and Rate of Return Percentage answers to the nearest percentage (i.e., 0.12 should be entered as 12).) Company Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return $470,000 $820,000 $43,000 $620,000 $152,000 $150,000 20 % 17% Percentage 171% 91% Dollar amount 59,000 Residual income 5,000

Explanation / Answer

Fill missing amount :

Company A Company B Company C Sales 470000 820000 620000 Net operating income 152000*20% = 30400 43000 13500+5000 = 18500 Average operating assets 152000 43000*100/17 =252941 150000 Return on investment 20% 17% 18500*100/150000 = 12% Minimum required rate of return Percentage 17% 23% 9% Dollar amount 152000*17% = 25840 59000 150000*9% = 13500 Residual income 4560 -16000 5000

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