Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

	Osaka		Yokohama
Sales	$	11,000,000	$	40,000,000
Net operating income	$	880,000	$	4,000,000
Average operating assets	$	2,750,000	$	20,000,000

Required:

1. For each division, compute the return on investment (ROI) in terms of margin and turnover

ROI for Osaka= ..%?

ROI Yokohama =.%?

2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division

Average operation income for Osaka & Yokohama?

Net Operation income Osaka & Yokohama?

Minimum required return on average assets Osaka & Yokohama?

3. Is Yokohamas greater amount of residual income an indication that it is better managed?

Yes

No