average total assets Operating income Return on investment (ROI) quired: Mortgage Loans $ 2,900 $ 609 21.00% Consumer Loans $ 16,750 $ 2,345 14.008
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- Consider the following data (in millions) from Trident Financial Inc., which has two main divisions, mortgage loans and consumer loans: Mortgage Loans Consumer Loans Average total assets $ 1,200 $ 21,500 Operating income $ 255 $ 2,795 Return on investment (ROI) 21.25 % 13.00 % Required: 1. Based on ROI, which division is more successful? multiple choice Mortgage loans Consumer loans 2. Trident uses residual income (RI) as a measure of the financial performance of its divisions. What is the RI for each division if the minimum desired rate of return is (a) 10%, (b) 15%, and (c) 20%? (Leave no cells blank. Enter "0" wherever required. Negative amounts should be indicated by a minus sign. Enter your answers in millions of dollars, rounded to nearest whole number.)Required Information [The following Information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12%. Complete this question by entering your answers in the tabs below. Numerator: Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,173,000…Return on Investment and Residual Income Consider the following data (in millions) fromTrident Financial Inc., which has two main divisions, mortgage loans and consumer loans:[LO 19-1][LO 19-1, 19-2]Mortgage Loans Consumer LoansAverage total assets $2,000 $20,000Operating income $400 $2,500Return on investment (ROI) 20% 12.5%Required1. Based on ROI, which division is more successful? Why?2. Trident uses residual income (RI) as a measure of the financial performance of its divisions. What isthe RI for each division if the minimum desired rate of return is (a) 10%, (b) 15%, and (c) 20%? Whichdivision is more successful under each of these rates?
- The sales, income from operations, and invested assets for each division of Frasier Company are as follows: Income from Invested Sales Operations Assets Division B $4,900,000 $530,000 $2,300,000 Division C 4,500,000 795,000 2,400,000 Division D 6,800,000 795,000 2,700,000 Required: (a) Using the DuPont formula, determine the following for each division: • Division B o Profit margin (rounded to two decimal places): o Investment turnover (rounded to four decimal places): o Rate of return on investment (rounded to one decimal place): Division C o Profit margin (rounded to two decimal places): o Investment turnover (rounded to four decimal places): o Rate of return on investment (rounded to one decimal place): • Division D o Profit margin (rounded to two decimal places):The income from operations and the amount of invested assets in each division of MagenticZero Industries are as follows: a. Compute the rate of return on investment for each division.b. Which division is the most profitable per dollar invested?Return on investment is often expressed as follows: ROI = (b1) Sales Net operating income Controllable margin Average operating assets Average operating assets Profit margin Assets turnover Comparative data on three companies operating in the same industry follow. The minimum required ROI is 10% for all three companies. Determine the missing amounts. (Round asset turnover of Company B and return on investment of Company C to 1 decimal place, e.g. 15.2 or 15.2% and all other answers to O decimal places, e.g. 152. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Return on investment Residual income (d) Save for Later (f) (h) (j) $ eTextbook and Media Controllable margin Company A Sales $1,580,000 $173,800 $790,000 (c) % (e) (g) A X (k) $ Sales Average operating assets Company B $725,800 $152,418 % (a) $ (b) 2.1 % (i) LA (1) $ Company C Attempts: 0 of 2 used $5,387,000 0.6 % 5 Submit Answer
- 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 2 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 17%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Osaka $ 10,100,000 $ 808,000 $ 2,525,000 Osaka Division For each division, compute the return on investment (ROI). % Yokohama $ 31,000,000 $ 3,100,000 $ 15,500,000 Yokohama %The vice president of operations of Moab Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year ending October 31, 20Y9, for each division are as follows: (P14-5) Touring Bike Division Trail Bike Division Sales $1,500,000 $5,00 Cost of goods sold Operating expenses Invested assets 900,000 4,000,000 495,000 968,000 750,000 3,600,000 Instructions 1. Prepare condensed divisional income statements for the year ended October 31, 20Y9, assuming that there were no service department charges. Touting Bike Division Trial Bike DivisionUse the following information to answer #7 and # 8 An investment banker is analyzing two companies as possible investments, but is concerned about the impact that each company's cost structure might have on its profitability. The following CVP income statements are available for Chantal Corp. and Mantle, Inc. Chantal Corp. Mantle, Inc. Sales revenue $700,000 $700,000 Variable costs 350,000 487,500 Contribution margin 350,000 212,500 Fixed costs 225.000 87,500 Net income $125,000 $125.000 If sales decrease by 20% for each company, the impact on net income will be: a decrease of 10% for Chantal and a decrease of 14% for Mantle. O a decrease of 20% for Chantal and a decrease of 20% for Mantle. O a decrease of 56% for Chantal and a decrease of 34% for Mantle. O a decrease of 56% for Chantal and a decrease of 78% for Mantle.
- 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 2 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 18%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Osaka $ 9,400,000 $ 752,000 $ 2,350,000 Osaka Division For each division, compute the return on investment (ROI). % Yokohama $ 24,000,000 $ 2,400,000 $8,000,000 Yokohama %1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. Use the same format as shown above. What is Crossfire’s net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region?2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. Round percentages to one decimal place and the investment turnover to two decimal places.