Romano Corporation has three operating divisions and requires a 14% return on al
ID: 2587315 • Letter: R
Question
Romano Corporation has three operating divisions and requires a 14% return on all investments. Selected information is presented here Required Calculate the missing amounts for each division. (Do not round intermediate calculations. Round "Margin", "Turnover" and "Roi" to 2 decimal places.) Division X Division Y Division Z $ 1,027,000 122,900 584,000 Revenues Operating income Operating assets Margin Turnover ROI Residual income $ 105,500 $ 344,400 16.00 % turn(s) 2.00 turn(s) 2.00 turn(s) 26,330Explanation / Answer
Answer 1. Division X Division Y Division Z Revenues 1,027,000 688,800 1,319,500 $344,400 X 2 $659,750 X 2 turns Operating Income 122,900 110,208 105,500 $688,800 X 16% Operating Assets 584,000 344,400 659,750 Margin 11.97% 16.00% 8.00% $122,900 / $1,027,000 $105,500 / $1,319,500 Turnover 1.76 turn(s) 2.00 turn(s) 2.00 turn(s) $1,027,000 / $5,84,000 ROI 21.04% 32.00% 15.99% 11.97% X 1.76 Turns 16% X 2 Turns $105,500 / $659,750 Residual Income 52,820 68,880 26,330.00 $122,900 - ($584,000 X 12%) $110,208 - ($344,400 X 12%) Margin = Operating Income / Revenues Turnover = Revenues / Operating Assets ROI = Margin X Turnover or Operating Income / Operating Assets Residual Income = Operating Income - (Operating Assets X Return on Investments) Division Z Residual Income = Operating Income - (Operating Assets X Return on Investments) Therefore, $26,330 = $105,500 - (Operating Assets X 12%) Operating Assets = $659,750
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.