Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Operating Profit Margin, Asset Turnover, Return on Investment ( ROI ) , and Residual Income ( RI ) . Financial information for Livingston Tech Support,
Operating Profit Margin, Asset Turnover, Return on Investment ROI and Residual Income RI Financial information for Livingston Tech Support, Inc., for the most recent fiscal year appears as follows. All dollar amounts are in thousands.
Livingston Tech Support, Inc.
Segmented Income Statements
for the Current Fiscal Year
dollar amounts are in thousands
Web Division IT Division
Sales $ $
Cost of goods sold
Gross margin $ $
Allocated overhead from corporate
Selling and administrative expenses
Operating income $ $
Income tax expense rate
Net income $ $
Livingston Tech Support, Inc.
Segmented Balance Sheets
at End of Most Recent Fiscal Year
dollar amounts are in thousands
Web Division IT Division
Ending Balance Beginning Balance Ending Balance Beginning Balance
Assets
Cash
$ $ $ $
Accounts receivable
Inventory
Total current assets
$ $ $ $
Property, plant and equipment net
Investment in Global, Inc.
Land held for sale
Total assets $ $ $ $
Liabilities and owners' equity
Accounts payable
$ $ $ $
Other current liabilities
Total current liabilities
$ $ $ $
Longterm liabilities
Total liabilities
$ $ $ $
Total owners' equity
Total liabilities and owners' equity $ $ $ $
Required:
Calculate average operating assets for each division. Hint: land held for sale and investments in Global, Inc., are not operating assets.
Calculate operating profit margin, asset turnover, and return on investment for each division.
Calculate residual income for each division assuming a cost of capital rate of percent.
What does the information from requirements b and c tell us about each division?Operating Profit Margin, Asset Turnover, ROI, and RI
Note: All dollar amounts are in thousands as presented in the textbook.
a
b
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started