Sher Manufacturing Pty Ltd has two retail divisions., which have the following reported results for the year: (i) Calculate the ROI for both divisions (ii) Calculate residual income assuming the firm requires a return of 18% on invested capital (iii) Which was the more successful division? Explain. (Hint: think carefully about this) (b) Giratina is a retailer and is a division of a larger retail company. The following data relate to the most recent year of operations: Furnishing department Dress making Division Profit $2,160,000 $441,000 Average invested Capital 12,000,000 2,100,000 Sales Revenue $9,000,000 Cost of Goods Sold 4,950,000 Operating Expenses 3,600,000 Average Invested Capital 4,500,000 (i) Calculate the division’s return on sales, investment turnover and return on investment. (ii) Describe how the division improve its ROI. (hint issue the 2 component ratios to explain
Sher Manufacturing Pty Ltd has two retail divisions., which have the following reported results for the year: (i) Calculate the ROI for both divisions (ii) Calculate residual income assuming the firm requires a return of 18% on invested capital (iii) Which was the more successful division? Explain. (Hint: think carefully about this) (b) Giratina is a retailer and is a division of a larger retail company. The following data relate to the most recent year of operations: Furnishing department Dress making Division Profit $2,160,000 $441,000 Average invested Capital 12,000,000 2,100,000 Sales Revenue $9,000,000 Cost of Goods Sold 4,950,000 Operating Expenses 3,600,000 Average Invested Capital 4,500,000 (i) Calculate the division’s return on sales, investment turnover and return on investment. (ii) Describe how the division improve its ROI. (hint issue the 2 component ratios to explain
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sher Manufacturing Pty Ltd has two retail divisions., which have the following reported results for the year:
- (i) Calculate the ROI for both divisions
- (ii) Calculate residual income assuming the firm requires a return of 18% on invested capital
- (iii) Which was the more successful division? Explain. (Hint: think carefully about this)
(b) Giratina is a retailer and is a division of a larger retail company. The following data relate to the most recent year of operations:
|
Furnishing department |
Dress making Division |
|
|
Profit |
$2,160,000 |
$441,000 |
|
Average invested Capital |
12,000,000 |
2,100,000 |
|
Sales Revenue |
$9,000,000 |
|
Cost of Goods Sold |
4,950,000 |
|
Operating Expenses |
3,600,000 |
|
Average Invested Capital |
4,500,000 |
- (i) Calculate the division’s return on sales, investment turnover and
return on investment . - (ii) Describe how the division improve its ROI. (hint issue the 2 component ratios to explain
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