Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Frozen Foods Division: Year 1 Year 2 Sales $6,000,000 $6,200,000 Operating income 420,000 434,000 Average operating assets 4,000,000 4,000,000 Canned Foods Division: Year 1 Year 2 Sales $2,400,000 $2,600,000 Operating income 120,000 117,000 Average operating assets 1,000,000 1,000,000 Required: 1. Compute the ROI and the margin and turnover ratios for each year for the frozen foods division. (Round your answer to four significant digits). 2. Compute the ROI and the margin and turnover ratios for each year for the canned foods division. (Round your answer to four significant digits). 3. Explain the change in ROI from year one and year two for each division.
Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Frozen Foods Division: Year 1 Year 2 Sales $6,000,000 $6,200,000 Operating income 420,000 434,000 Average operating assets 4,000,000 4,000,000 Canned Foods Division: Year 1 Year 2 Sales $2,400,000 $2,600,000 Operating income 120,000 117,000 Average operating assets 1,000,000 1,000,000 Required: 1. Compute the ROI and the margin and turnover ratios for each year for the frozen foods division. (Round your answer to four significant digits). 2. Compute the ROI and the margin and turnover ratios for each year for the canned foods division. (Round your answer to four significant digits). 3. Explain the change in ROI from year one and year two for each division.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Residual Income and Investment Decisions
Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division.
Frozen Foods Division:
| Year 1 | Year 2 | |
| Sales | $6,000,000 | $6,200,000 |
| Operating income | 420,000 | 434,000 |
| Average operating assets | 4,000,000 | 4,000,000 |
Canned Foods Division:
| Year 1 | Year 2 | |
| Sales | $2,400,000 | $2,600,000 |
| Operating income | 120,000 | 117,000 |
| Average operating assets | 1,000,000 | 1,000,000 |
Required:
1. Compute the ROI and the margin and turnover ratios for each year for the frozen foods division. (Round your answer to four significant digits).
2. Compute the ROI and the margin and turnover ratios for each year for the canned foods division. (Round your answer to four significant digits).
3. Explain the change in ROI from year one and year two for each division.
4. Which of the data analytic types-descriptive, diagnostic, predictive or prescriptive-is Allard using and comparing year one to year two for the ratios? Explain?
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