Question

Meyl Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama Selected data on the two divisions follow Division Sales Net operating income Average rating assets $ $ $ 10,500,000 30,0 3.500. $35,000,000 $ 2,800.00 17.500.000 Required: 1. For each division, compute the return on investment (RO in terms of margin and turnover 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15% Compute the residual income for each division 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Complete this question by entering your answers in the tabs below. Required Required 2 Required For each division, compute the return on investment (ROI) in terms of margin and turnover Reged 2 >

Answer 1

15 ROJ in terms of margm x turonover ROI - Margin & Tumover. ROI - Net operating Income & sales saks - Aug operating asset RoI- Net operating Income Aug operating asset Rol for Osaka & Yokohama partiuwars osaka Yokohama a) Met operatry $ 630,000 2,800,000 Income. b. Average operating & 3,500,000/ 17,500,000 asseb 167. 2) ROI- a 100 I 187. 630,000 olassa 2,800,000 3,500,000 - Yoklu 17500,000

& Min Rate Average 2) Residual value - Net operating - 1 Income (operatry of. calculation of Rendual value partenan osaka Yokohama a) Met operating $ 630,000 2.800,000 Arg operahy $ 3,500,000 17,500,000 c) ir Rokete retu 151 d) bxc ( 5x1S) AS,0o 6 ( 2,ooo e Residual Income Ca-d) & 1 losooo / 175,000. Income asset 157. ③. (NO) Since the Net operating Income is 4 tiones greates than osake The Residual mome should be more than 4 times of lorooo