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Zida, a national manufacturer of lawn mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional
Zida, 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 (n thousands of dollars) (Click the icon to view the information) Read the requirements Data table G Requirements 1. Calculate each division's ROI Sales Operating Income Total Assets Residential S 450,000 $ Professional $ 740,000 $ 54,000 $ 133,200 $ 180,000 2. Calculate each division's sales margin. Interpret your results 3. Calculate each division's capital tumover Interpret your results 370,000 Assume that management has a 27% target rate of retum for each division Print Done 4. Use the expanded ROI formula to contem your results from Requrement 1 What can you conclude? 5. Calculate each division's residual income (R) Interpret your results Print Done Residential Professional Interpret your results The Professional Division is eaming about i on each dollar of sales whereas the Residential Division is only eaming about on each dollar of sales. The Yhigher sales margin helps to account for its higher ROI.
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