Epic Sports Data Set used for S10-7 through S10-9: Epic Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: Snow Sports Sales $5,800,000 Operating Income Total Assets $1,044,000 $4,500,000 Non-Snow Sports $8,800,000 $1,584,000 $6,400,000 Current Liabilities $450,000 $700,000 Epic's management has specified a target 16% rate of return. $10-7 Calculate ROI (Learning Objective 3) Refer to Epic Sports Data Set. 1. Calculate each division's ROI. 2. Top management has extra funds to invest. Which division will most likely receive those funds? Why? 3. Can you explain why one division's ROI is higher? How could management gain more insight? 510-8 $10-9 Compute sales margin and capital margin turnover (Learning Objective 3) Refer to the Epic Sports Data Set. 1. Compute each division's sales margin. Interpret your results. 2. Compute each division's capital turnover (round to two decimal places). Interpret your results. 3. Use your answers to Question 2 along with your answers to Question 1 to recalculate ROI using the expanded formula. Do your answers agree with your ROI calculations in $10-7? Compute residual income (Learning Objective 3) Refer to the Epic Sports Data Set. Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI