Ruger has a profit margin of 16% based on revenues of $400,000 and an investment turnover...
Ruger has a profit margin of 16% based on revenues of $400,000 and an investment turnover is 2. What is the residual income when the cost of capital is 10%?
Homework Answers
Profit margin = Income/$400,000
16% = Income/$400,000
Income = $64,000
Investment turnover = $400,000/Assets
2 = $400,000/Assets
Assets = $200,000
Residual income = $64,000 - (10% × $200,000) = $44,000
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Ruger has a profit margin of 16% based on revenues of $400,000
and an investment turnover...
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