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Ferris Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected data on the two divisions follow: Division Perth Darwin $9,510,000
Ferris Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected data on the two divisions follow: Division Perth Darwin $9,510,000 $23,400,000 Sales Operating income 665,700 2,106,000 Average operating assets 3,170,000 11,700,000 Required: 1. Compute the ROI for each division. ROI Perth % Darwin % 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division. Perth Darwin Residual income
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