Question
Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual
Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow. Trucking Division Seafood Division Construction Division Sales $ 1,200,000 $ 750,000 $ 900,000 Operating assets 600,000 250,000 350,000 Net operating income 116,000 66,000 63,000
(a) Compute the return on investment for each division. (Round answers to three decimal places.)
Trucking ROI | |
Seafood ROI | |
Construction ROI |
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