Return on Investment and Residual IncomeJohnson 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 AssetsLas Vegas $1,260,000 $4,000,000Dallas1,500,000 8,000,000Tampa2,340,000 12,000,000a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI.Round ROI to the nearest whole percentage.ROILas VegasDallasTampa0%0%0%Las Vegas $DallasTampab. 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.RIRankRank000♦

ROI means return on investments. This is one of profitability ratio being used in business. This…

Return on Investment and Residual Income 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 $1,260,000 $4,000,000 Dallas Tampa 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 Las Vegas Dallas Tampa 1,500,000 8,000,000 2,340,000 12,000,000 Las Vegas $ Dallas Tampa 0% 0% 0% Rank → ◆ 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. RI Rank → 0 0 0 ◆

Return on Investment and Residual Income 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 $1,260,000 $4,000,000 Dallas Tampa 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 Las Vegas Dallas Tampa 1,500,000 8,000,000 2,340,000 12,000,000 Las Vegas $ Dallas Tampa 0% 0% 0% Rank → ◆ 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. RI Rank → 0 0 0 ◆

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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