Use the DuPont formula to determine the return on investment for each business divisions. Round whole percents to one decimal place and investment turnover to two decimal places. Division Return on Investment Company-Owned fill in the blank 1% Franchised Operations fill in the blank 2% b. Determine the residual income for each division, assuming a minimum acceptable income of 15% of total assets. Round minimal acceptable return to the nearest million dollars. Division Residual income Company-Owned $fill in the blank 3millions Franchised Operations $fill in the blank 4millions c. The Franchised Operations (FO) segment has the return on investment, which is mainly the result of a investment turnover.
Return on Investment, Residual Income for a Service Company
H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised operations.
Recent financial information provided by H&R Block for its company-owned and franchised operations is as follows (in millions):
Company-Owned |
Franchised Operations |
||||
| Revenues | $2,651 | $ 335 | |||
| Income from operations | 617 | 86 | |||
| Total assets | 3,930 | 586 |
a. Use the DuPont formula to determine the return on investment for each business divisions. Round whole percents to one decimal place and investment turnover to two decimal places.
| Division | Return on Investment |
| Company-Owned | fill in the blank 1% |
| Franchised Operations | fill in the blank 2% |
b. Determine the residual income for each division, assuming a minimum acceptable income of 15% of total assets. Round minimal acceptable return to the nearest million dollars.
| Division | Residual income |
| Company-Owned | $fill in the blank 3millions |
| Franchised Operations | $fill in the blank 4millions |
c. The Franchised Operations (FO) segment has the return on investment, which is mainly the result of a investment turnover.
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