Answer Final answer: The ROI for Osaka Division and Yokohama division are 21% and 18% respectively. In terms of margin and turnover, Osaka has a 7% margin and 3 turnover, whereas Yokohama has an 8% margin and 2.25 turnover. Residual income for Osaka is $30,000 and for Yokohama is $120,000.
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- Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income. Average operating assets Required 1 Required: 1. For each division, compute the return on investment (ROI). 2. Compute the residual income for each division assuming the company's minimum required rate of return is 15%. Division Complete this question by entering your answers in the tabs below. Required 2 Residual income Osaka $ 10,500,000 $630,000 $ 3,500,000 Osaka Yokohama $ 35,000,000 $ 2,800,000 $ 17,500,000 Compute the residual income for each division assuming the company's minimum required rate of return is 15%. YokohamaBlue Spruce accumulates the following data for its North Division, an investment center, for the current year. Contribution margin Controllable fixed costs Average operating assets $186,000 $113,550 $700,000 Compute the ROI. (Round answer to two decimal places (e.g., 15.25%).) ROI %Pharoah Corporation's Cajun Spice division has a segment margin is $434200 for the current reporting period. The division has an asset turnover of 3.1. Segment margin as a percentage of sales is 10%. What is the division's ROI? O 31% O 10% O 21% O The answer cannot be determined from the information given.
- The following information is available about the status and operations of Jay Arr Company, which has a required ROI of 15% and discount rate of 12%: Division A Division B Divisional Investment P 500,000 P 1,250,000 Divisional Profit P 350,000 P 625,000 Variable Cost P 500,000 P 3,500,000 Divisional Sales P1, 500,000 P 5,500,000 Division A could increase its sales by P 300,000 by increasing its investment by P300,000. Compute its ROI. Division A could increase its sales by P150,000 by increasing its investment by P400,000. Compute its total residual income. Division B could reduce its investment so that its asset turnover increased by 2, while holding total sales constant. Compute its residual income.Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow Sales Net operating Income Average operating assets Required 11 Required 2 Division Osaka $ 10,000,000 $ 648,000. Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Yokohama $ 38,000,000 $3,040,000 $3,600,000 $ 19,000,000 For each division, compute the return on investment (ROI). Osaka Yokohama % Required 2 >The following data are available for two divisions of Solomons Company. North Division $10,535,000 49,000,000 South Division $ 47,460,000 339,000,000 Division operating profit Division investment The cost of capital for the company is 8 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.) b-2. If Solomons measures performance using economic value added, which division had the better p c. Would your evaluation change if the company's cost of capital was 17 percent? 1. When evaluated by ROI? 2. When evaluated by EVA? Complete this question by entering your answers in the tabs below. Req A1 Divisions North South Reg A2 estion 12- Hom... Calculate the ROI for both North and South divisions. (Enter your answers as a percentage rounded to 1 de 32.1).) ROI Req…
- The Break Division of Zoe motors Company had the following financial data for the year: Assets available for use P 1,000,000 BV P1,500,000 MV Residual income P 100,000 Return on investment 15% A. What was the Break Division’s segment income? B. If the manager of the Break Division is evaluated based on return on investment, how much would she willing to pay for an investment that promise to increase net segment income by P50,000?The following information is available about the status and operations of VTS Company, which has a required ROI of 15% and discount rate of 12%: Division A Division B Divisional Investment P 500,000 P 1,250,000 Divisional Profit P 350,000 P 625,000 Variable Cost P 500,000 P 3,500,000 Divisional Sales P1, 500,000 P 5,500,000 Division B could reduce its investment so that its asset turnover increased by two, while total sales increased by 10%. Compute its ROI. Division C is being considered to be added. This would require additional investment of P750,000. Upon addition of this new division, the ROI for all the company’s operations shall become 40%. What is the income or loss associated with the new investment? If the manager of the division is evaluated on ROI alone, will the company invest on the new project? Why?The following information is available about the status and operations of Big Shot Corp., which has a required ROI of 15% and discount rate of 12%: Division A Division B Divisional Investment P 500,000 P 1,250,000 Divisional Profit P 350,000 P 625,000 Variable Cost P 500,000 P 3,500,000 Divisional Sales P1, 500,000 P 5,500,000 Division A could increase its sales by P 300,000 by increasing its investment by P300,000. Compute its ROI. Division A could increase its sales by P150,000 by increasing its investment by P400,000. Compute its total residual income. Division B could reduce its investment so that its asset turnover increased by 2, while holding total sales constant. Compute its residual income.
- The Magazine Division of XYZ publication Company had the following financial data for the year: Assets available for use P 1,000,000 BV P1,500,000 MV Residual income P 100,000 Return on investment 15% A. What was the Magazine Division’s segment income? B. If the manager of the Magazine Division is evaluated based on return on investment, how much would she willing to pay for an investment that promise to increase net segment income by P50,000?Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,215,000 $ 1,818,000 Cost of goods sold and operating expenses 897,000 1,287,000 Net operating income $ 318,000 $ 531,000 Average invested assets $ 1,160,000 $ 1,500,000 The company’s hurdle rate is 7.26 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for the division for each independent situation that follows: a. Operating income increases by 9 percent. b. Operating income decreases by 9 percent. c. The company invests $259,000 in each division, an amount that generates $105,000 additional income per division. d. Coolbrook changes its hurdle rate to 5.26 percent.Mitsu Division has the following results for the year: Revenues $1,080,000Variable expenses 440,000Fixed expenses 400,000Total divisional assets are $1,600,000. The company's minimum required rate of return is 14 percent. What is the residual income for Scottso?
