The Tandem division of the Great Adventures Cycles Company had the following results last year (in thousands). (10 marks, 2.5 marks each) Sales $4,000,000 Operating income $480,000 Total assets $2,000,000 Current liabilities $300,000 Management's target rate of return is 10%.

1. What is the Tandem division's profit margin?

A) 7.50%

B) 24.00%

C) 12.00%

D) 200.00%

Answer:

B) What is the Tandem division's asset turnover?

A) 2.0

B) 4.2

C) 8.3

D) 13.3

Answer:

C) What is the Tandem division's Return on Investment (ROI)?

A) 7.50%

B) 12.00%

C) 24.00%

D) 200.00%

Answer

D) What is the Tandem division's Residual Income (RI)?

A) $152,000

B) $280,000

C) $320,000

D) $8,000,000

Answer: