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Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets ROI Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations) Osaka Average operating assets Net operating income Minimum required return Residual income % Yes Division Osaka Yokohama 9,900,000 $ 29,000,000 $ 792,000 $2,900,000 $ 2,475,000 $ 14,500,000 Ο No $ 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. Yokohama Osaka % 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Yokohama

Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets ROI Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations) Osaka Average operating assets Net operating income Minimum required return Residual income % Yes Division Osaka Yokohama 9,900,000 $ 29,000,000 $ 792,000 $2,900,000 $ 2,475,000 $ 14,500,000 Ο No $ 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. Yokohama Osaka % 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Yokohama

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations) ROI Osaka % Average operating assets Net operating income Minimum required return Residual income Division Osaka Yokohama 9,900,000 $ 29,000,000 $ $ 792,000 $ 2,900,000 $ 2,475,000 $ 14,500,000 Yokohama 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. Osaka % Yokohama 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Ⓒ Yes Ο No
Transcribed Image Text:Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations) ROI Osaka % Average operating assets Net operating income Minimum required return Residual income Division Osaka Yokohama 9,900,000 $ 29,000,000 $ $ 792,000 $ 2,900,000 $ 2,475,000 $ 14,500,000 Yokohama 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. Osaka % Yokohama 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Ⓒ Yes Ο No
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