Question
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
| Division | ||
|---|---|---|
| Osaka | Yokohama | |
| Sales | $ 9,800,000 | $ 28,000,000 |
| Net operating income | $ 588,000 | $ 2,240,000 |
| Average operating assets | $ 2,450,000 | $ 14,000,000 |
Required:
1. For each division, compute the return on investment (ROI).
2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division.
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Lab Manual To Accompany Auditing IT Infrastructure For Compliance Version 2
Authors: Martin Weiss
2nd Edition
1284059189, 978-1284059182
