Question

Cabell Products is a division of a major corporation. Last year the division had total sales of $21,720,000, net operating income of $1,346,640, and average operating assets of $4,778,400. The company's minimum required rate of return is 15%. The division's margin is closest to:

2.

Answer 1

Cabell :
Margin = Net operating income / Sales = 1346640 / 21720000	6.20%
Dacker :
Residual income = Net operating income - ( Average operating assets * Minimum required rate of return ) = 3758960 - ( 9900000 * 15% )	2273960
Agustin :
Return on investment = Net operating income / Average operating assets = 648980 / 4560000	14.23%
Agustin :
Turnover = Sales / Average operating assets = 17810000 / 4640000	3.84