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):

Assume that management has a 24% target rate of return for each division.

Requirements
Round all of your answers to four decimal places.
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 yourresults.

Transcribed Image Text:

Sales Operating Income Total Assets 585,000 Residential Professional 70,200 2,040 195,000 $362,000 $1,013,600 $15