A food manufacturer reports the following for two of its divisions for a recent year. ($ millions) Beverage Division Cheese Division Invested assets, beginning $ 2,664 $ 4,457 Invested assets, ending 2,594 4,401 Sales 2,682 3,926 Operating income 350 635 Assume that each of the company’s divisions has a required rate of return of 6%. Compute residual income for each division. (Enter your answers in millions.)
A food manufacturer reports the following for two of its divisions for a recent year. ($ millions) Beverage Division Cheese Division Invested assets, beginning $ 2,664 $ 4,457 Invested assets, ending 2,594 4,401 Sales 2,682 3,926 Operating income 350 635 Assume that each of the company’s divisions has a required rate of return of 6%. Compute residual income for each division. (Enter your answers in millions.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A food manufacturer reports the following for two of its divisions for a recent year.
| ($ millions) | Beverage Division | Cheese Division | |||||
| Invested assets, beginning | $ | 2,664 | $ | 4,457 | |||
| Invested assets, ending | 2,594 | 4,401 | |||||
| Sales | 2,682 | 3,926 | |||||
| Operating income | 350 | 635 | |||||
Assume that each of the company’s divisions has a required
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