Zeldas, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars) (Click the icon to view the information ) EE Read the requirements. EEB (Click Read the Requiren 1. Calculate each division's ROI. First ente 2. Calculate each division's sales margin. Interpret your results. Requirements 3. Calculate each division's capital turnover. Interpret your results 4. Use the expanded ROl formula to confirm your results from Requirement 1. What can you conclude? 5. Calculate each division's residual income (RI). Interpret your results. Residenti Professio Interpret y Each divi Print Done eve Data Table Read t Require SalesOperating Income Total Assets $ 200,000 $ 365,000 First en 850,000 s 1,095,000 153,300 68,000 Residential Professional Resider Profess Interpre Each divISTOTS NU Assume that management has a 23% target rate of return for each division. Print Done Requirement 1. Calculate each division's RO First enter the formula, then calculate each division's ROl using the expanded formula ROI Residential Professional Interpret your results. Each division's ROI is Requirement 2. Calcul First enter the formula, 1 has an even higher ROI than the NI; however, the t your results in. and then continue to the next question equal to the target rate of return very high very low Choose from any list c First enter the formula, then calculate each division's sales margin. : Sales marg Residential Professional Interpret your results. The Professional Division is earning about on each dollar of sales whereas the Residential Division only earning abouton each dollar of sales. The account for its higher ROI. higher sales margin helps Residential Professional Interpret your results. The Professional Division is generating aboutof sales for every dollar of assets. The Residential times times about is s generating about f sales foreach dolar l ste of sales for each dollar of assets invested. The more efficient. Requirement 4. Use the expanded ROl formula to confirm your results from Requirement 1. What can you conclude First enter the expanded formula, then calculate each division's ROI using the expanded formula. ROI Residential Professional Confirm your results from Requirement 1. Does your answer for the residential ROl agree with the basic ROI? Does your answer for the professional ROl agree with the basic ROI? Even though the efficiency (as measured by the capital turnover) is higher than that of the the profitability (as measured by the sales margin) is so much higher that it causes its ROl to be much higher than the Requirement 5. Calculate each division's residual income (RI). Interpret your results First enter the formula, then calculate each divisions RI. RI Res. Prof Interpret your results. exceeding management's expectations
