Selected sales and operating data for three divisions of a multinational structural engineering firm are provided Sales Average operating assets Net operating income Minimum required rate of return Asia division Europe division North America division Required: 1. Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round inte calculations and round your final answers to the nearest whole percent.) ROI Asia division Europe division at ge RI Division Europe Asia North America $ 12,000,000 $ 14,000,000 $ 25,000,000 3,000,000 10,000,000 5,000,000 400,000 420,000 1,000,000 16% % 14% 10% 2. Compute the RI for each division. (Negative amounts should be indicated by a minus sign.) www
Selected sales and operating data for three divisions of a multinational structural engineering firm are provided Sales Average operating assets Net operating income Minimum required rate of return Asia division Europe division North America division Required: 1. Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round inte calculations and round your final answers to the nearest whole percent.) ROI Asia division Europe division at ge RI Division Europe Asia North America $ 12,000,000 $ 14,000,000 $ 25,000,000 3,000,000 10,000,000 5,000,000 400,000 420,000 1,000,000 16% % 14% 10% 2. Compute the RI for each division. (Negative amounts should be indicated by a minus sign.) www
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3. Assume that each division is presented with an investment opportunity that would yield a 13% rate of return.
a. If performance is being measured by ROI, which division(s) will probably accept the opportunity? Reject the opportunity
Asia division
Europe division
North America division
ROI
Transcribed Image Text:Selected sales and operating data for three divisions of a multinational structural engineering firm are provided be
Division
Europe
Asia
North America
$ 12,000,000 $ 14,000,000 $25,000,000
3,000,000
420,000
5,000,000
400,000
10%
14%
Sales
Average operating assets
Net operating income
Minimum required rate of return
Required:
1. Compute the ROI for each division using the formula stated in terms of margin and turnover. (Do not round interm
calculations and round your final answers to the nearest whole percent.)
Asia division
Europe division
North America division
ROI
Asia division
Europe division
%
2. Compute the RI for each division. (Negative amounts should be indicated by a minus sign.)
RI
10,000,000
1,000,000
16%
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