XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: (Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? ( X First enter the formula, then calculate each divisions residual income. Options: Capital turnover/Current liabilities/ Operating income/Sales/Total Assets/Effective tax rate/Target rate of return/WACC ) = Residual income Snow % ) = Non-Snow %) Interpret your results Negative/Positive Exceeds/Is equal to/Is lower than Both divisions have residual income. This means that the divisions are earning income at a rate that management's minimum expectations. Are your results consistent with each division's ROI? This result is with the ROI calculations. Consistent/Non-consistent Data Table ROI 21.0% Sales Operating Income Total Assets Current Liabilities Snow Sports $ 5,300,000 $ 1,007,000 $ 4.800,000 $ 470,000 Non-Snow Sports $ 8,200,000 $ 1,558,000 $ 6,700,000 $ 770,000 XTreme's management has specified a target 13% rate of return. 23.3% Print Done