The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $103,400 $470,000 Commercial Division 105,000 420,000 Internet Division 130,000 500,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $103,400 $105,000 $130,000 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income?
The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $103,400 $470,000 Commercial Division 105,000 420,000 Internet Division 130,000 500,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $103,400 $105,000 $130,000 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The operating income and the amount of invested assets in each division of Conley Industries are as follows:
| Operating income | Invested Assets | |||
| Retail Division | $103,400 | $470,000 | ||
| Commercial Division | 105,000 | 420,000 | ||
| Internet Division | 130,000 | 500,000 |
Assume that management has established a 10% minimum acceptable
a. Determine the residual income for each division.
| Retail Division | Commercial Division | Internet Division | ||||
| Operating income | $103,400 | $105,000 | $130,000 | |||
| Minimum acceptable operating income as a percent of invested assets | ||||||
| Residual income | $ | $ | $ |
b. Which division has the most residual income?
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