Following is operating information relative to Tyee Corporation:

Balance Sheets: Jan 1, 2015 Dec 31, 2015 Cash $100,000 $150,000 Accounts Receivable 500,000 600,000 Inventories 600,000 800,000 Equipment, net 1,000,000 800,000 Total Assets $2,200,000 $2,350,000

Sales during the year totaled $10,000,000 and operating income was $500,000. Use the average of operating assets to determine operating assets.

Required: 1. Calculate the operating margin. 2. Calculate the turnover. 3. Calculate the ROI using the DuPont formula. 4. If the parent company wants a 15% return on its average operating assets, what is the residual income? Show calculations. 5. List at least two deficiencies of the ROI method of measuring performance and discuss your reasons.