Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Net Income Assets Las Vegas $1,160,000 $4,000,000 Dallas 1,400,000 8,000,000 Tampa 2,240,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Rank Las Vegas Answer Answer Dallas Answer Answer Tampa Answer Answer b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income. ROI Rank Las Vegas Answer Answer Dallas Answer Answer Tampa Answer Answer
Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Net Income Assets Las Vegas $1,160,000 $4,000,000 Dallas 1,400,000 8,000,000 Tampa 2,240,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Rank Las Vegas Answer Answer Dallas Answer Answer Tampa Answer Answer b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income. ROI Rank Las Vegas Answer Answer Dallas Answer Answer Tampa Answer Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets:
| Net Income | Assets | ||
|---|---|---|---|
| Las Vegas | $1,160,000 | $4,000,000 | |
| Dallas | 1,400,000 | 8,000,000 | |
| Tampa | 2,240,000 | 12,000,000 |
a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI.
Round ROI to the nearest whole percentage.
| ROI | Rank | |
|---|---|---|
| Las Vegas | Answer
|
Answer |
| Dallas | Answer
|
Answer |
| Tampa | Answer
|
Answer |
b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income.
| ROI | Rank | |
|---|---|---|
| Las Vegas | Answer
|
Answer |
| Dallas | Answer
|
Answer |
| Tampa | Answer
|
Answer |
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