Question
a) TekashiCo. had the following results for the last year: Sales RM720,000 Return on investment 28% Margin 11% Calculate the average operating assets for the
a) TekashiCo. had the following results for the last year:
Sales RM720,000
Return on investment 28%
Margin 11%
Calculate the average operating assets for the last year.
(b)Trollz Sdn. Bhd had net operating income of RM150,000 and average operating assets of RM500,000. The company requires a return on investment of 19%.
Required:
(i) Calculate the company's current return on investment and residual income.
(ii) Refer to 2(b), the company is investigating an investment of RM400,000 in project that will generate annual net operating income of RM78,000.Calculate the return on investment and the residual income of the project. Should the company invest in this project?
(c)Distinguish between cost centre and profit centre. Give an example.
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