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Tesla evaluates divisional performance: Division A (Operating income $2,000,000, Assets $10,000,000), Division B (Operating income $1,500,000, Assets $8,000,000). Requirements: Calculate the return on investment (ROI)

  1. Tesla evaluates divisional performance: Division A (Operating income $2,000,000, Assets $10,000,000), Division B (Operating income $1,500,000, Assets $8,000,000).
    • Requirements:
      • Calculate the return on investment (ROI) for each division.
      • Calculate the residual income for each division.
      • Rank divisions based on ROI and residual income.
      • Discuss the strengths and limitations of ROI and residual income as performance metrics.

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