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Question 3 (10 marks) Company ABC has two segments: hard drive and cloud drive. The following information relates to last year's operations at each division.
Question 3 (10 marks) Company ABC has two segments: hard drive and cloud drive. The following information relates to last year's operations at each division. The minimum required rate of return is the same for both divisions. Hard Drive Cloud Drive Segment Segment Sales $40,000 (d) Average operating assets $10,000 (e) Net operating income (a) $3,000 Residual Income $1,000 (f) Margin (b) 10% Turnover (c) 3 Return on Investment 20% (g) (ROI) Instructions: (a) Compute the unknown quantities above [(a) through (g)]. SHOW YOUR COMPUTATIONS. (7 marks) (b) Please identify which segment has lower ROI rate? (1 marks). Please identify the reasons of why it has a lower ROI rate? (2 marks)
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