Assume the Outflow Division of Kipper Faucets had the following results last year:

Net sales revenue $5,150,000 Operating income $2,060,000 Return on investment 20%

Managements target rate of return 16%

7. What is the divisions profit margin ratio?

A. 250% B. 80% C. 40% D. 20%

8. What is the divisions asset turnover ratio?

A. 0.20 B. 0.50 C. 1.25 D. 2.00

9. What is the divisions residual income?

A. $ 3,090,000 B. $ 1,648,000 C. $ 412,000 D. $ 82,400