Question
5. The sales, operating income, and invested assets for each division of Salem Company are as follows : Operating Invested Sales Income Assets Division C
5. The sales, operating income, and invested assets for each division of Salem Company are as follows:
|
|
| Operating | Invested |
|
| Sales | Income | Assets |
| Division C | $4,000,000 | $410,000 | $3,500,000 |
| Division D | 3,500,000 | 600,000 | 4,000,000 |
| Division E | 2,250,000 | 780,000 | 7,000,000 |
Management has established a minimum rate of return for invested assets of 11%.
| a | Determine the residual income for each division. |
| b | Based on residual income, which division is the most profitable? |
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HRD Score Card 2500 Based On HRD Audit
Authors: T V Rao
1st Edition
8178298368, 978-8178298368
