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.

Question

Want to see the full answer?

Answer 1

Question

Chapter 24, Problem 9E

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

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

I need help answering the following How can I Briefly describe 2 analytical techniques based on the time value of money concepts. And how can I Briefly describe 2 analytical techniques which are not based on the time value of money concepts. Describing what you can consider to be the top 2 advantages and 2 disadvantages of each technique and provide an example to support top advantage of each method.

Please provide correct solution this accounting question

The company should recognize a

Answer 2

Question

Chapter 24, Problem 9E

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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 24, Problem 9E

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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 24, Problem 9E

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

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 24, Problem 9E

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 9E

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 9E

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

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 24 - Prob. 1DQ Ch. 24 - What is the difference between operating...Ch. 24 - What are controllable costs?Ch. 24 - Prob. 4DQ 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

Videos

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.

Want to see the full answer?

Chapter 24 Solutions

Videos

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.

Want to see the full answer?

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.