Question

A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.)

Having trouble finding the solution to Company C for the Net operating income and Dollar amount.

	Company A B C Sales $320,000 $770,000 $510,000 Net operating income $36,480 $45,000 $???? Average operating assets $152,000 $225,000 $159,000 Return on investment (ROI) 24 % 20 % 16 % Minimum required rate of return: Percentage 13 % 25 % 14 % Dollar amount $19,760 $57,000 $???? Residual income $16,720 $(12,000) $4,000

Answer 1

Net operating income = Average operating assets*Return on investment (ROI)

= $159,000*16% = $25440

Minimum required rate of return ($) = Net operating income - Residual income

= $25440-4000 = $21,440