i am a little confused about this can you please help 458884
Selected sales and operating data for three divisions for three different companies are given below:
Division X Divsion Y Division Z
Sales $900,000 $750.000 $600,000
Average operating assets $600,000 $150,000 $200,000
Net operating income $ 54,000 $ 30,000 $ 10,000
Mininuim required rate of return 10% 16% 8%
A. Compute ROI for each division using the formula stated in terms of margin and turnover. Show computation.
b. Compute the residuel income for each division. Show computation.
c. Under which of these method would they accept an opportunity with a 15% return? Show computation and details.
This is what I have then I’m stuck:
a. a. Division X
ROI = Net operating income / Average operating assets
$54,000/600,000 = 9%