Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.2ME
Mini-Exercise 9.2
LO 5
Calculate operating income and net income Selling, general, and administrative expenses were $66,000; net sales were $300,000; interest expense was $7,100; research and development expenses were $31,500; net cash provided by operating activities was $79,200; net income was $16,800; income tax expense was $7,600; cost of goods sold was $165,000.
Required:
- Calculate operating income for the period.
- Calculate net income for the period.
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Use the following information to answer the questions.
Company X
$ 12,480,000
$ 3,120,000
$
Company Y
$ 28,480,000
$ 7,120,000
512,640
8.50%
Company Z
$ 20,480,000
$ 5,120,000
532,480
10.40%
Sales
Average operating assets
Net operating income
Minimum required rate of return
561,600
8.00%
Required:
1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover.
2. Compute the residual income (loss) for each company.
3. Each company is presented with an investment opportunity that would yield a 9% rate of return.
a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment
opportunity.
b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the
investment opportunity.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Reg ЗA
Req 3B
Compute the return on investment (ROI) for each company…
Question 10.2
Provide the missing data for the following situations:
Red Division
White Division
Green Division
Sales
A
$10,000,000
E
Net operating income
$240,000
$500,000
$288,000
Total assets
B
C
$1,600,000
Return on investment
0.16
0.10
F
Return on sales
0.05
D
0.14
Use the following information to answer the questions.
Company X
$ 12,480,000
$ 3,120,000
561,600
8.00%
Company Y
$ 28,480,000
$ 7,120,000
2$
Company Z
$ 20,480,000
$ 5,120,000
532,480
Sales
Average operating assets
Net operating income
Minimum required rate of return
$
512,640
8.50%
10.40%
Required:
1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover.
2. Compute the residual income (loss) for each company.
3. Each company is presented with an investment opportunity that would yield a 9% rate of return.
a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment
opportunity.
b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the
investment opportunity.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req ЗA
Req 3B
Each company is presented with an investment…
Chapter 9 Solutions
Accounting: What the Numbers Mean
Ch. 9 - Prob. 9.1MECh. 9 - Mini-Exercise 9.2 LO 5 Calculate operating income...Ch. 9 - Mini-Exercise 9.3 LO 6 Calculate basic EPS Net...Ch. 9 - Mini-Exercise 9.4
LO 10
Calculate cash flows from...Ch. 9 - Exercise 9.5
LO 1
Calculate earned revenues Big...Ch. 9 - Exercise 9.6 LO 1 Calculate earned revenues...Ch. 9 - Exercise 9.7 LO 2 Effects of inventory error If...Ch. 9 - Exercise 9.8 LO 2 Effects of inventory error...Ch. 9 - Prob. 9.9ECh. 9 - Prob. 9.10E
Ch. 9 - Exercise 9.11 LO 5 Operating income versus net...Ch. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Prob. 9.18ECh. 9 - Problem 9.19 LO 5 Calculate operating income and...Ch. 9 - Prob. 9.20PCh. 9 - Problem 9.21
LO 3
Use gross profit ratio to...Ch. 9 - Prob. 9.22PCh. 9 - Prob. 9.23PCh. 9 - Problem 9.24
LO 10
Prepare a statement of cash...Ch. 9 - Problem 9.25
LO 10
Cash flows from operating,...Ch. 9 - Prob. 9.26PCh. 9 - Prob. 9.27PCh. 9 - Problem 9.28 LO 10. 11 Complete balance sheet and...Ch. 9 - Prob. 9.29PCh. 9 - Prob. 9.30PCh. 9 - Prob. 9.31CCh. 9 - Prob. 9.32CCh. 9 - Prob. 9.33C
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