Return on investment (ROI): Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows: R O I = N e t I n c o m e A v e r a g e t o t a l a s s e t s R O I ( E x p a n d e d ) = N e t I n c o m e S a l e s × S a l e s A v e r a g e t o t a l a s s e t s Or R O I = P r o f i t M a r g i n R a t i o × A s s e t T u r n o v e r r a t i o Residual Income (RI): Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows: R e s i d u a l I n c o m e = N e t I n c o m e – ( A v e r a g e a s s e t s × R e q u i r e d r a t e o r R e t u r n ) The residual income on investment for each investment center

Question

Want to see the full answer?

Answer 1

Question

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Question:6

Solve this Accounting problem

Financial Accounting Question need help

Answer 2

Question

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Answer 6

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Answer 7

Chapter 24, Problem 10QS

To determine

Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

ROI = Net IncomeAverage total assets

ROI (Expanded)= Net IncomeSales ×SalesAverage total assets

Or

ROI = Profit Margin Ratio ×Asset Turnover ratio

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

Residual Income = Net Income – (Average assets ×Required rate or Return)

The residual income on investment for each investment center

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 24 - Prob. 1QS Ch. 24 - QS 24-2 Basis for cost allocation C1 In each...Ch. 24 - QS 244 Responsibility accounting report...Ch. 24 - QS 24-5 Allocating costs to departments...Ch. 24 - QS 24-6 Allocating costs to departments P2...Ch. 24 - QS 24-7 Allocating costs to departments P2...Ch. 24 - Prob. 7QS Ch. 24 - QS 24-9 Departmental contribution to overhead...Ch. 24 - QS 24-10 Computing return on investment A1...Ch. 24 - QS 24-11 Computing residual income A1 Refer to...

Videos

Want to see the full answer?

Chapter 24 Solutions