Requirement: 1) Calculate the investment center's Sales Margin, Capital Turnover, Return on Investment (ROI) and Residual Income.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 1
The financial information of an investment centre belongs to The Siblings Company is
reported as follows for the current year.
Sales
$60,000,000
$32,000,000
Variable Costs
$13,000,000
$14,000,000
Fixed Costs
Current Assets
Non-Current Assets:
Plant and Equipment
$50,000,000
$10,000,000
$100,000,000
$15,000,000
Investments
Vacant Land
Factory (20% completed)
Additional information:
1. The company excludes the non-productive assets in the determination of invested
capital.
2. The fixed assets remain fixed as per previous year.
3. The minimum required rate of return is 20%.
Requirement:
1) Calculate the investment center's Sales Margin, Capital Turnover, Return on
Investment (ROI) and Residual Income.
Transcribed Image Text:Question 1 The financial information of an investment centre belongs to The Siblings Company is reported as follows for the current year. Sales $60,000,000 $32,000,000 Variable Costs $13,000,000 $14,000,000 Fixed Costs Current Assets Non-Current Assets: Plant and Equipment $50,000,000 $10,000,000 $100,000,000 $15,000,000 Investments Vacant Land Factory (20% completed) Additional information: 1. The company excludes the non-productive assets in the determination of invested capital. 2. The fixed assets remain fixed as per previous year. 3. The minimum required rate of return is 20%. Requirement: 1) Calculate the investment center's Sales Margin, Capital Turnover, Return on Investment (ROI) and Residual Income.
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