QUESTION:THE INCOME OPERATIONS AND THEINVESTED ASSETS IN EACH DIVISIONZERO INDUSTRIES ARE AS FOLLOWS:INCOMEOPERATIONSRETAIL DIVISION$343,200COMMERCIAL320,000DIVISIONINTERNET176,000AMOUNT OFOF MAGNETICFROM INVESTEDASSETS$1,320,0001,600,000800,000DIVISIONA. COMPUTE THE RATE OF RETURN ON INVESTMENTFOR EACH DIVISION.B. WHICH DIVISION IS THE MOST PROFITABLE PERDOLLAR INVESTED?

A. Compute the rate of return on investment for each division.- Retail Division:- Rate of Return =…

Answered: QUESTION: THE INCOME OPERATIONS AND THE…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4. The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Division Income from Operations Invested Assets Retail Division $5,500,000 $30,000,000 Commercial Division 6,750,000 23,000,000 Internet Division 1,500,000 12,000,000 a. Compute the return on investment for each division. b. Which division is the most profitable per dollar invested?
Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales $1,476,000 Cost of goods sold 664,200 Gross profit $811,800 Administrative expenses 295,200 Income from operations $516,600 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $2,460,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin fill in the blank 1 % Investment turnover fill in the blank 2 Rate of return on investment fill in the blank 3 % b. If expenses could be reduced by $73,800 without decreasing sales, what would be the impact on the…
Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,470,000 $ 974,000 $ 4,861,000 Operating Income 173,200 172,300 180,500 Investment in assets 428,200 567,500 2,553,200 The return on sales (ROS) for Division Y is: Multiple Choice 3.7%. 30.4%. 17.7%. 11.8%.
Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 9,600,000 $ 26,000,000 Net operating income $ 672,000 $ 2,340,000 Average operating assets $ 3,200,000 $ 13,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed?
The following data are available for two divisions of Ryan Enterprises: Alpha Division Beta Division Division operating profit $ 7,360,000 $ 1,240,000 Division investment 32,160,000 3,160,000 The cost of capital for the company is 7 percent. Ignore taxes. Required: a-1. Calculate the ROI for both Alpha and Beta divisions. a-2. If Ryan measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both Alpha and Beta divisions. (The divisions have no current liabilities.) b-2. If Ryan measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company’s cost of capital was 10 percent, when evaluated by ROI? when evaluated by EVA?
Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales $816,000 Cost of goods sold 367,200 Gross profit $448,800 Administrative expenses 285,600 Income from operations $163,200 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,360,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin 2 x % Investment turnover Rate of return on investment % b. If expenses could be reduced by $40,800 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer…
Return on investment The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets Retail Division $72,600 $330,000 Commercial Division 117,600 490,000 Internet Division 224,100 830,000 a. Compute the return on investment for each division. (Round to the nearest whole percentage.) Division Percent Retail Division % Commercial Division % Internet Division b. Which division is the most profitable per dollar invested?
Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 9,800,000 $ 28,000,000 Net operating income $ 588,000 $ 2,240,000 Average operating assets $ 2,450,000 $ 14,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed? Osaka Yokohama ROI % % Osaka Yokohama Residual income
Residual Income The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $102,900 Commercial Division 115,000 Internet Division 123,200 Assume that management has established a 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Income from operations Minimum acceptable of income from operations Residual income b. Which division has the most residual income? Commercial Division 490,000 500,000 770,000 Retail Division Commercial Division $102,900 $115,000 Internet Division $123,200
Return on investment The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $156,200 $710,000 Commercial Division 56,000 280,000 Internet Division 194,400 720,000 a. Compute the return on investment for each division. (Round to the nearest whole number.) Division Percent Retail Division fill in the blank 1 % Commercial Division fill in the blank 2 % Internet Division fill in the blank 3 % b. Which division is the most profitable per dollar invested?

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