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Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: |
Division | ||||
Osaka | Yokohama | |||
Sales | $ | 9,100,000 | $ | 21,000,000 |
Net operating income | $ | 455,000 | $ | 1,470,000 |
Average operating assets | $ | 2,275,000 | $ | 10,500,000 |
Required: | |
1. | For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations. Enter your answers as a percent (i.e., 0.12 should be entered as 12).) |
2. | Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 12%. Compute the residual income for each division. |
3. | Is Yokohamas greater amount of residual income an indication that it is better managed? | ||||
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