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.

$\backslash$table$[[\backslash$table$[[$Liabilities and$],[$owners$\text{'}$ equity$]],,,,,,,,],[\backslash$table$[[$Accounts$],[$payable$]],$$$,790,$$$,610,$$$,1,550,$$$,980],[\backslash$table$[[$Other current$],[$liabilities$]],,160,,145,,420,,300],[\backslash$table$[[$Total$],[$current$],[$liabilities$]],$$$,950,$$$,755,$$$,1,970,$$$,1,280],[\backslash$table$[[$Long$-$term$],[$liabilities$]],,0,,0,,,,0],[\backslash$table$[[$Total$],[$liabilities$]],$$$,950,$$$,755,$$$,1,970,$$$,1,280],[\backslash$table$[[$Total owners'$],[$equity$]],,4,850,,4,575,,8,680,,8,910],[\backslash$table$[[$Total liabilities and$],[$owners$\text{'}$ equity$]],$$$,5,800,$$$,5,330,$$$,10,650,$$$,10,190]]$

Required:

a$.$ Calculate average operating assets for each division. $($Hint: land held for sale and investments in Global, Inc., are not operating assets.$)$

b$.$ Calculate operating profit margin, asset turnover, and return on investment for each division.

c$.$ Calculate residual income for each division assuming a cost of capital rate of $12$ percent.

d$.$ What does the information from requirements $b$ and $c$ tell us about each division?

$42.$ Operating Profit Margin, Asset Turnover, ROI, and RI

$($Note: All dollar amounts are in thousands as presented in the textbook.$)$

Operating Profit Margin, Asset Turnover, ROI, and Residual Income $($continued$)$ c$.$ Residual income $($in thousands$)$ is calculated as follows:

d$.$ Correct

Answer options:

$2.$ The IT Division has the highest ROI, highest operating profit margin, highest residual income, and lowest asset turnover. Thus, the IT Division is the best performing division, but needs to work on improving asset turnover.

b$.$ The Web Division has the highest ROI, highest operating profit margin, highest residual income, and lowest asset turnover. Thus, the Web Division is the best performing division, but needs to work on improving asset turnover.

c$.$ The Web Division has the highest operating income and, therefore, is the best performing division.

d$.$ The IT Division has the highest operating income and, therefore, is the best performing division.

$$ The Web Division has the highest ROI, highest residual income, highest asset turnover, and lowest operating profit margin. Thus, the Web Division is the best performing division, but needs to work on improving operating profit margin.