Zachs, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars): (Click the icon to view the information.) Data Table er than that of the profitability (as measured by the Total Assets Sales Operating Income Residential 880,000 70,400 220,000 774,900 Professional 154,980 378,000 Assume that management has a 26% target rate of return for each division. RI Print Done % ) Requirement 1. Calculate each division's ROI. First enter the formula, then calculate each division's ROI using the expanded formula. ROI Residential Professional Interpret your results. Each division's ROI is ; however, the has an even higher ROI than the II Requirement 2. Calculate each division's sales margin. Interpret your results. First enter the formula, then calculate each division's sales margin. Sales margin %3D Residential Professional Interpret your results. on each dollar of sales whereas the Residential Division is only earning about on each dollar of sales. The The Professional Division is earning about higher sales margin helps to account for its higher ROI. II Requirement 3. Calculate each division's capital turnover. Interpret your results. First enter the formula, then calculate each division's capital turnover. (Round your answer to two decimal places.) Capital turnover %3D times Residential Professional times Interpret your results. The Professional Division is generating about of sales for every dollar of assets. The Residential Division is generating about of sales for each dollar of assets invested. The is more efficient. Requirement 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude? First enter the expanded formula, then calculate each division's ROI using the expanded formula. ROI %3D Residential %3D Professional %D Confirm your results from Requirement 1. Does your answer for the residential ROI agree with the basic ROI? Does your answer for the professional ROI agree with the basic ROI? II What can you conclude? profitability (as measured by Even though the efficiency (as measured by the capital turnover) is higher than that of the the the sales margin) is so much higher that it causes its ROI to be much higher than the Requirement 5. Calculate each division's residual income (RI). Interpret your results. First enter the formula, then calculate each divisions RI. RI Res. % ) %D % ) Prof. Interpret your results. exceeding management's expectations. Choose from any list or enter any number in the input fields and then continue to the next
