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Zoe, 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
Zoe, 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.) Read the requirements. Requirement 1. Calculate each division's ROI. First enter the formula, then calculate each division's ROI using the expanded formula. Operating Income Total assets Residential S 65,720 Professional S 167,400 $ 212,000 372,000 Interpret your results. = ROI 31 % 45 % Each division's ROI is very high ; however, the Professional Division has an even higher ROI than the Residential Division. Requirement 2. Calculate each division's sales margin. Interpret your results. First enter the formula, then calculate each division's sales margin. Data table Residential Professional Operating income S 65,720 167400 Requirements $ Sales 1,314,400 1 = Sales margin 5% % 1. Calculate each division's ROI. 2. Calculate each division's sales margin. Interpret your results. 3. Calculate each division's capital turnover. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude? 5. Calculate each division's residual income (RI). Interpret your results. Residential Professional Sales $ 1,314,400 $ $ 1,395,000 $ Operating Income 65,720 $ 167,400 $ Total Assets 212,000 372,000 Assume that management has a 25% target rate of return for each division. Print Done
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