Accounting: What the Numbers Mean
Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Chapter 15, Problem 15.17E

Exercise 15.17

LO 9

Investment center analysis; ROI and residual income The Central Division of National, Inc., has operating income of $16,000 on sales revenue of $160,000. Divisional operating assets are $80,000, and management of National has determined that a minimum return of 12% should be expected from all investments.

Required:

  1. Using the DuPont model, calculate The Central Division’s margin, turnover, and ROI.
  2. Calculate The Central Division’s residual income.

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