Question

Results from First ​Corporation's most recent year of operations are presented in the following table.
turnover, and return on investment (ROI). Data Table nargin, the sa Operating income ................$ Total assets. ................. $ Current liabilities............... 9,100 14,000 4,200 35,000 16 % the ca Sales........................ ..........$ Target rate of return. .............. the RO Print Done

Requirements

1.	Calculate the sales​ margin, capital​ turnover, and return on investment​ (ROI).
2.	Calculate the residual income​ (RI).

Answer 1

Sales Margin Operating income / Sales - Sales Margin $9,100 / $35,000 = 26% Capital Turnover Sales 7 Total Assets = Capital Turnover $35,000 / $14,000 = 2.50 ROI Operating income / Total Assets = Capital Turnover $9,100 $14,000 = 65% Residual Income Operating income - Total Assets x Target rate of return = RI $9,100 - $14,000 X 16%)= $6,860