Question
Stevenson Corporation had $550,000 in average invested assets, liabilities of $150,000, sales of $660,000,net income amounting to $100,000, and a desired minimum rate of return
Stevenson Corporation had $550,000 in average invested assets, liabilities of $150,000, sales of $660,000,net income amounting to $100,000, and a desired minimum rate of return of 15%. The residual income for Stevenson is a positive:
a. $40,000
b. $17,500
c. $14,850
d. $16,500
Two divisions of Halloway Company (Divisions X and Y) both have a profit margin of 8%. However, Division X has a higher ROI (return on investment) than Division Y. This is because Division X's investment turnover is larger than that of Division Y (1.8 to 1.0). Which of the following statements are true?
a. | Division Y has a higher ROI than Division X. |
b. | Division X has a higher investment turnover because it is larger than Division Y. |
c. | Division X is controlling costs better than Division Y. |
d. | Division X is using its assets more efficiently to generate sales than Division Y. |
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