Question
Question 1. The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows: Sales Income from Operations
Question 1.
The sales, income from operations, invested assets, and residual income for each division of Marcus Company are as follows:
|
| Sales | Income from Operations | Invested Assets |
| Division X | $5,000,000 | $645,000 | $4,100,000 |
| Division Y | 6,800,000 | 777,000 | 4,000,000 |
| Division Z | 3,750,000 | 760,000 | 7,600,000 |
Marcuss Minimum desired ROI is 10%
Required:
Determine the following for each division:
- Profit margin
- Investment Turn-over
- ROI using DuPont Formula
- Residual Income
Solution:
|
| Sales
| Income from Operations (OI)
| Invested Assets (IA)
| Profit Margin (PM)
| Investment Turn-over (ITO)
| ROI
| Minimum Desired Income (DI) IA x 10%
| Residual Income
OI DI
|
| Division X | 5,000,000 | 645,000 | 4,100,000 | 12.9% |
|
|
|
|
| Division Y | 6,800,000 | 777,000 | 4,000,000 | 11.4% |
|
|
|
|
| Division Z | 3,750,000 | 760,000 | 7,600,000 | 20.3% |
|
|
|
|
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
Making Accountability Work Dilemmas For Evaluation And For Audit
Authors: Marie-Louise Bemelmans-Videc, Jeremy Lonsdale, Burt Perrin
1st Edition
1412865557, 978-1412865555
