Question
Topaz Corporation's Newport Division has the following information: Sales revenue $17,010,000 Operating Income $850,500 Sales margin 5.0 % Return on investment 15.0 % Topaz's imputed
Topaz Corporation's Newport Division has the following information:
Sales revenue | $17,010,000 | |
Operating Income | $850,500 | |
Sales margin | 5.0 | % |
Return on investment | 15.0 | % |
Topaz's imputed interest rate is 12% (its minimum required rate of return)
Topaz considers the investment in a division to be the division's average invested capital.
Topaz regards the divisions Operating Income as its income for performance measurement ratios.
Required: (Show your workings) a.Compute Newport's capital turnover. (Rounded) b.Compute Newport's average invested capital. c.Calculate Newport's residual income.
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Intermediate Accounting Volume 1
Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod Dick
7th Edition
1260306747, 978-1260306743
