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. Round your percentage answers to nearest whole percent and other amounts to whole dollars.)
Question 2
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
15,250,000
$
35,250,000
$
25,250,000
Average operating assets
$
3,050,000
$
7,050,000
$
5,050,000
Net operating income
$
655,750
$
528,750
$
732,250
Minimum required rate of return
9.00
%
9.50
%
14.50
%
Required:
1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.
2. Compute the residual income (loss) for each division.
3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?
Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places.)