Question

Question 1 3 pts The following table contains actual segment data for two of PepsiCo's geographic divisions: 1. Europe and 2. Asia, Middle East, and Africa (AMEA). 2012 Data ($M) Operating Income Assets Sales Revenue Europe $1,330 $19,218 $13,441 Asia, Middle East, and Africa (AMEA). $747 $5,738 $6,653 Requirements: 1. Compute each division's ROI. 2. Compute each division's sales margin. 3. Compute each division's capital turnover. 4. Comment on the results of the preceding calculations. 5. Compute each division's residual income, assuming upper management desires a 25% minimum rate of return.

Answer 1

1,2,3,5
ROI , Sales Margin , Capital Turnover, Residual Income
ROI	=Operating Income /Assets
Sales Margin = Operating Income /Sales
Capital Turnover = Sales / Assets
Residual Income = Net Operating Income - (Minimum Required Return rate * Assets)
		Europe	Asia,Middle East & Africa
a	Operating Income	1330	747
b	Assets	19218	5738
c	ROI (a/b)	6.92%	13.02%
d	sales	13441	6653
e	sales margin	9.90%	11.23%
f	Capital Turnover (d/b)	0.70	1.16
g	Residual Income [a- (b*25%)	-3474.5	-687.5
4)	Comment
	Aisa,middle east & africa division has greater ROI as compare Europe.
	However sales margin of Asia, Middle East & Africa is greater than Europe.
	Asia,Middle East & Africa divisions has greater turnover than Europe.