Return on Investment , Profit margin and Investment Turnover/ Residual Income: The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under: Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company. Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration. Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company. However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio. Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa. Requirement1: To Determine: TheReturn on Investment for both the division need to be computed.

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Answer 1

Question

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

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The company should recognize a

Answer 2

Question

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

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Answer 3

Question

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

Expert Solution & Answer

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Answer 4

Question

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

Expert Solution & Answer

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Answer 5

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

Answer 6

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

Answer 7

Chapter 24, Problem 10E

To determine

Return on Investment, Profit margin and Investment Turnover/ Residual Income:

The above three ratios are important tool to measure the company ‘efficiency in earning profits and has been described as under:

Return on Investment: This suggest the percentage income earned by the company on the average amount of net assets employed in the company. The higher the ratio, better is the performance of the company.

Profit Margin: The ratio suggest that the percentage margin which the company is earning on the sales consideration.

Investment turnover ratio; The Investment turnover ratio suggest that the number of times the assets get converted in to sales. The efficiency of the company is counted on this ratio as the more number of times the assets get converted in to sales, more efficient is the company.

However, all the three ratios is integrated in the sense, that the Return on investment is a product of Margin and assets turnover ratio.

Residual income: It is also one of the measures of determining the efficiency of company in generating income. In this target income of the division/ company is provided (based on target rate of return on average assets employed). When the division/ company is earning more than the target income. It will be having positive residual income, otherwise, vice versa.

Requirement1:

To Determine: TheReturn on Investment for both the division need to be computed.

Answer 8

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

Answer 9

To determine

Requirement2:

To determine: The residual income for each department shall be computed.

Answer 10

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

Answer 11

To determine

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 24 - Prob. 1DQ Ch. 24 - What is the difference between operating...Ch. 24 - What are controllable costs?Ch. 24 - _________costs are not within the manager’s...Ch. 24 - Prob. 5DQ Ch. 24 - Prob. 6DQ Ch. 24 - Prob. 7DQ Ch. 24 - What is the difference between direct and indirect...Ch. 24 - Prob. 9DQ Ch. 24 - Prob. 10DQ

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Requirement2:

To determine: The residual income for each department shall be computed.

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.

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Chapter 24 Solutions

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Requirement2: To determine: The residual income for each department shall be computed.

Requirement 3: To determine: The decision on whether to accept the new investment opportunity.

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Chapter 24 Solutions

Requirement2:

To determine: The residual income for each department shall be computed.

Requirement 3:

To determine: The decision on whether to accept the new investment opportunity.