FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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ABC Company operates two divisions with the following operating Information for the month of May. Division 1: sales, $148,000; operating Income, $49,580; operating assets, $370,000. Division 2: sales, $94,000; operating Income, $48,316; operating assets, $470,000. ABC Company expects a minimum return of 10% should be earned from all investments. Required: a. Prepare ABC Company's ROI analysis using the DuPont model for each division. b. Calculate each division's residual income. Complete this question by entering your answers in the tabs below. Required A Required B Prepare ABC Company's ROI analysis using the DuPont model for each division. Note: Do not round intermediate calculations. Round Turnover answers to one decimal place. Round Margin and ROI answers to the nearest whole percentage. DuPont Performance Analysis: Revenues Operating Income Operating Assets Margin Turnover ROI Division 1 %6 turns 96 Division 2 % turns 96
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Transcribed Image Text:ABC Company operates two divisions with the following operating Information for the month of May. Division 1: sales, $148,000; operating Income, $49,580; operating assets, $370,000. Division 2: sales, $94,000; operating Income, $48,316; operating assets, $470,000. ABC Company expects a minimum return of 10% should be earned from all investments. Required: a. Prepare ABC Company's ROI analysis using the DuPont model for each division. b. Calculate each division's residual income. Complete this question by entering your answers in the tabs below. Required A Required B Prepare ABC Company's ROI analysis using the DuPont model for each division. Note: Do not round intermediate calculations. Round Turnover answers to one decimal place. Round Margin and ROI answers to the nearest whole percentage. DuPont Performance Analysis: Revenues Operating Income Operating Assets Margin Turnover ROI Division 1 %6 turns 96 Division 2 % turns 96
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Step 1: Define Return on Investment:-
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Step 2: Preparing DuPont Performance Analysis :-
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Step 3: Calculating Residual Income
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