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The directors of Donny Co are reviewing the performance of two of its divisions. The following information is available for the year ending 31
The directors of Donny Co are reviewing the performance of two of its divisions. The following information is available for the year ending 31 March 2009. South division North division Sales Operating profit Capital employed $ 000 $ 000 50,000 3,200 700 3,500 840 4,000 South division is a food retailer that sells low priced food from a number of stores that are rented on short-term contracts. North division sells luxury motor vehicles, which it manufactures in a fully automated production plant. Required: (a) Calculate the following performance measures for the two divisions: (i) Return on capital employed; (ii) Return on sales; (iii) Asset turnover (based upon capital employed); (2 marks) (2 marks) (3 marks) (3 marks) (iv) Residual income (using an imputed interest charge of 12% per annum).
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