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 В C Sales 800,000 $ 330,000 $ 690,000 Net operating income 41,000 $ Average operating assets Return on investment (ROI) $ 155,000 147,000 22 % 21 % Minimum required rate of return: 17 % 14 % Percentage Dollar amount 54,000 Residual income $ 7,000

Answer 1

	Company
	A	B	C
Sales	330,000	800,000	690,000
Net operating Income	$155,000*22% = $34,100	41,000	$20,580 - $7,000 = $13,580
Average operating assets	155,000	$41,000/21% = $195,238	147,000
Return on asset (ROI)	22%	21%	$13,580/$147,000 = 9%
Minimum Required rate of return
Percentage	17%	$54,000/$195,238 = 28%	14%
Dollar Amount	$155,000*17% = $26,350	$                                    54,000	$147,000*14% = $20,580
Residual value	$34,100 - $26,350 = $7,750	$54,000-$41,000 = $13,000	$                                        7,000

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