Question
Compute and interpret the expanded ROI equation (Learning Objective 3) Rogers, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer
Compute and interpret the expanded ROI equation (Learning Objective 3)
Rogers, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars):
| Sales | Operating Income | Total Assets | |
|---|---|---|---|
| Residential | $ 850,000 | $ 68,000 | $200,000 |
| Professional | $1,095,000 | $153,300 | $365,000 |
Assume that management has a 25% target rate of return for each division.
Requirements
Round all of your answers to four decimal places.
-
Calculate each divisions ROI.
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Calculate each divisions sales margin. Interpret your results.
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Calculate each divisions capital turnover. Interpret your results.
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Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude?
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Calculate each divisions residual income (RI). Interpret your results.
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Quality Audits For Improved Performance
Authors: Dennis R. Arter
3rd Edition
0873895703, 978-0873895705
