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Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division: Fruit Division Flower Division Sales
Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:
Fruit Division | Flower Division | ||||
Sales revenue | $ | 660,000 | $ | 990,000 | |
Cost of goods sold and operating expenses | 495,000 | 742,500 | |||
Net operating income | $ | 165,000 | $ | 247,500 | |
Average invested assets | $ | 2,062,500 | $ | 1,375,000 | |
Orange has established a hurdle rate of 5 percent. Required: 1-a. Compute each divisions return on investment (ROI) and residual income for last year.(Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
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