Ch. 11 Part 2 In-class activities

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Student Name: Instructions: 1. Please input the your name at the top section of this sheet. 2. Save the file under your name followed by Week Inclass. For Example John Do - Week 3. Please read the given of each exercise and answer each part in the excel sheet provid 4. The areas highlighted in green are dropdown menu. You will need to select the accoun 5. The areas highlighted in blue are to input your numerical answers in. 6. All other areas are locked and cannot be accessed.
k1 Inclass. ded for that part. nt title or date from that menu.
Exercise 11-7 Computing and Interpreting Return on Investment Selected operating data on the two divisions of Prism Company are given below: Division Eastern Western Sales $ 800,000 $ 1,850,000 Average operating assets $ 300,000 $ 400,000 Operating income $ 70,000 $ 115,000 Plant and equipment $ 125,000 $ 200,000 Required: Margin Turnover ROI Formula: Eastern ROI = Western ROI = 1. Compute the rate of return for each division using the ROI formula stated in term 2. Which divisional manager seems to be doing the better job?
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ms of margin and turnover.
Exercise 11-13 Effects of Changes in Sales, Expenses, and Assets on ROI CommercialServices.com provides business-to-business services on the Internet. D concerning the most recent year appear below: Sales $ 3,000,000 Net operating income $ 150,000 Average operating assets $ 750,000 Required: 1. Compute the company's margin, turnover and return on investment (ROI). Margin Turnover ROI Formula: X Margin = Turnover = ROI = 2. The entrepreneur who founded the company is convinced that sales will increase by 50% and that net operating income will increase by 200%, with no increase in Sales Net operating income Average operating assets Margin = Turnover = ROI = 3. The Chief Financial Officer of the company believes a more realistic scenario wo a $1,000,000 increase in sales, requiring a $250,000 increase in average operat with a resulting $200,000 increase in net operating income. What would be the c Sales Net operating income Average operating assets Margin = operating assets. What would be the company’s ROI? ROI in this scenario?
Turnover = ROI =
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Data e next year n average ould be ting assets, company’s
Exercise 11-8 Contrasting Return on Investment and Residual Income Ferris Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected data on the two divisions follow: Division Perth Darwin Sales $ 9,000,000 $ 20,000,000 Operating income $ 630,000 $ 1,800,000 Average operating assets $ 3,000,000 $ 10,000,000 Required: Margin Turnover ROI Formula: X Perth ROI = Darwin ROI = minimum required rate of return for any division is 16%. Compute the residual inc for each division. Perth Darwin * * 1. Compute the ROI for each division. 2. Assume that the company evaluates performance using residual income and tha 3. Is the Darwin Division’s greater residual income an indication that it is better man
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come at the naged?
Exercise 11-12 Evaluating New Investments Using Return on Investment and Res Three divisions of Jameson Co. report the following sales and operating data: Spa Services Sales $ 600,000 $ 750,000 $ 400,000 Average operating assets $ 200,000 $ 250,000 $ 100,000 Operating income $ 30,000 $ 37,500 $ 24,000 Minimum RRR 10% 12% 10% Required: Spa Services Margin Turnover ROI Spa Services Fitness Training Spa Services Athletic Wear opportunity? Fitness Training Spa Services Athletic Wear Fitness Training Athletic Wear 1. Compute the ROI for each division, using the formula stated in terms of margin and tu Fitness Training Athletic Wear 2. Compute the residual income for each division. Fitness Training Athletic Wear 3. Assume that each division is presented with an investment opportunity that would yie a. If performance is being measured by ROI, which division or divisions will probably ac b. If performance is being measured by residual income, which division or divisions will
sidual Income urnover. eld a rate of return of 17%. ccept the opportunity? probably accept the
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Exercise 11-9: A family friend has asked for your help in analyzing the operations of three companie same service sector industry. Supply the missing data in the following table: Company A B Sales $ 400,000 $ 750,000 Operating income $ 45,000 Average operating assets $ 160,000 Return on investment 20% 18% Minimum required rate of return: Percentage 15% Dollar amount $ 50,000 Residual income (loss)
es operating in the C $ 600,000 - - $ 150,000 12% - $ 6,000 -
Total grade - - - - - -
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Exercise 11-10: Provide the missing data in the following table: Division Fab Consulting IT Sales $ 800,000 Operating income $ 72,000 $ 40,000 Average operating assets $ 130,000 Margin 4% 8% Turnover 5.00 Return on investment 18% 20%
- Total grade - - - - - -
- - -
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Exercise 11-11: FitPlus is a regional chain of health clubs. Each club’s manager has the authority to make i and is evaluated based largely on ROI. FitPlus Club 52 reported the following results for th Sales $ 750,000 Operating income $ 26,250 Average operating assets $ 80,000 Required: The following questions are to be considered independently. Margin Turnover ROI Formula: X Margin = Turnover = ROI = increases by $6,000. Further assume that this is possible without any increase in operatin club’s ROI be? Sales Operating income Average operating assets Margin = Turnover = ROI = Sales Operating income Average operating assets Margin = Turnover = ROI = or operating income. What would the club’s ROI be? Sales Operating income 1. Compute the club’s ROI. 2. Assume that the manager of the club is able to increase sales by $80,000 and that as a re 3. Assume that the manager of the club is able to reduce expenses by $3,200 without any c operating assets. What would the club’s ROI be? 4. Assume that the manager of the club is able to reduce operating assets by $20,000 witho
Average operating assets Margin = Turnover = ROI =
investments as needed he past year: 2.00 Average ope - Operating i - Sales - - 0.50 ng assets. What would the - - 0.50 - - 0.50 esult operating income change in sales or out any change in sales
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- - 0.50
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Total grade - -
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Student Name 0 Grade Out of Exercise 11-1 #REF! 4.50 Exercise 11-2 #REF! 7.00 Exercise 11-6 #REF! 3.50 Exercise 11-7 - 5.00 Exercise 11-8 - 6.50 Exercise 11-12 0.75 6.00 Total grade #REF! 32.50
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