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Return on Investment and Residual Income The Emergency Medical Services Company has two divisions that operate independently of one another. The financial data for the
Return on Investment and Residual Income The Emergency Medical Services Company has two divisions that operate independently of one another. The financial data for the year 20x5 reported the following results: Sales $3,000,000 $2,500,000 Operatlng income 750,000 550,000 Taxable income 650,000 375,000 Investment 5,000,000 4,400,000 The company's desired rate of return is 15%. Income is defined as operatlng income. a. What are the respective return-oninvestment ratios for the North and South dlvisions? Round ROI to the nearest whole percentage. ROI North 0 % South 0 % b. What are the respective residual incomes of the North and South divisions? Use a negative sign with your answers, if appropriate. Residual Income North $ 0 South $ 0 c. Which division has the better return on investment and which division has the better residual income figure? Return on investment Residuai income A V
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