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.) Company $ 330,000 $ 660,000 $ $ 760,000 53,000 $ $ 145,000 166,000 - 22% 17% % Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income 16 % 13 % $ 58,000 $ 5,000

Answer 1

Calculate following

	A	B	C
Sales	330000	760000	660000
Net operating income	166000*22% = 36520	53000	18850+5000 = 23850
Average operating assets	166000	53000*100/17 = 311765	145000
Return on investment (ROI)	22%	17%	23850/145000 = 16%
Minimum required rate of return
Percentage	16%	19%	13%
Dollar amount	166000*16% = 26560	58000	145000*13% = 18850
Residual income	36520-26560 = 9960	53000-58000 = -5000	5000