Question

and Yokohama Melji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka follow: data on the two divisi
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divi
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Ans1.

Calulation of (ROI) for each division in terms of margin and turnover.

Return on Investment = Margin * Turnover

Return on Investment = ( Net operating income/Sales) * (Sales/Average operating assets)

Osaka

ROI= (808,000/ 10,100,000) * (10,100,000/2,525,000) * 100

ROI = 0.08 * 4 * 100

ROI = 0.32*100 = 32%

Yokohama

ROI = (3,100,000 /31,000,000) * (31,000,000/15,500,000) *100

ROI = 0.1 * 2 * 100

ROI = 0.2 * 100 = 20%

Osaka Yokohama
Return on Investment (ROI) 32% 20%

2. Compute the residual income for each division.

Osaka Yokohama
Average operating assets (a) $ 2,525,000.00 $ 15,500,000.00
Net operating income (b) $      808,000.00 $    3,100,000.00
Minimum required return on average operatin g assets (c = 17% * a) $      429,250.00 $    2,635,000.00
Residual Income (b -c) $      378,750.00 $        465,000.00

3. Is Yokohama’s greater amount of residual income an indication that it is better managed?

No

This is because the Yokohama Division is larger as compared to Osaka Division and have a larger amount of residual income. But we can not compare the performance of divisions of different sizes by using their residual income . Always larger divisions will have more residual income. In fact, in the above case, the Osaka Division is well managed than Yokohama Division as the ROI of  Osaka Division is 32% which is much higher than Yokohama Division which has only 20% ROI.

Add a comment
Know the answer?
Add Answer to:
and Yokohama Melji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka follow:...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow. Sale Net operating income Average operating assets Division Osaka Yokohana $ 10,100,000 $ 31,000,000 $ 808,000 $ 3,100,000 $ 2,525,000 $15,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 $ $ $ Division Osaka Yokohama 9,500,000 $ 25,000,000 855,000 $ 2,750,000 2,375,000 $ 12,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama 10,700,000 $ 37,000,000 $749,000$ 3,330,000 Average operating assets 2,675,000 18,500,000 Sales Net operating income Required: .For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama $ 9,100,000 $ 21,000,000 $ 455,000 $ 1,470,000 $2,275,000 $ 10,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama $ 9,100,000 $ 21,000,000 $ 455,000 $ 1,470,000 $ 2,275,000 $ 10,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama $ 9,300,000 $ 23,000,000 $ 651,000 $ 2,070,000 $ 2,325,000 $ 11,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama 10,7ee, eee $ 37,000, eee 749,eee $ 3,330, eee 2,675,000 $ 18,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama $10,300,000 $33,000,000 $ 721,000 $ 2.970,000 $ 2,575,000 $ 16,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations. Enter your answers as a percent (i.e., 0.12 should be entered as 12).) Osaka Yokohama ROI...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the tw...

    Meiji Isetan Corp. 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 $ $ $ Division Osaka Yokohama 9,600,000 $ 26,000,000 672,000 $ 2,340,000 3,200,000 $ 13,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...

  • Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...

    Meiji Isetan Corp. 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 Division Osaka Yokohama $ 10,900,000 $ 39,000,000 $ 763,000 $ 3,510,000 $ 2,725,000 $ 19,500,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT