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Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Athletic Training Services Wear Sales $630, 000 $880, 000 $650,000 Average
Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Athletic Training Services Wear Sales $630, 000 $880, 000 $650,000 Average operating assets $126, 000 $176, 000 $130, 000 Operating income $ 31, 500 $ 44,000 $ 39,000 Minimum required rate of return 12% 14% 12% Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. ROI Fitness training Spa services o Athletic wear 2. Compute the residual income for each division. Fitness Training Spa Services Athletic Wear Residual income3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 26%. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear V5 b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear
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