Question

Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama 10,700,000 $ 37,000,000 $749,000$ 3,330,000 Average operating assets 2,675,000 18,500,000 Sales Net operating income Required: .For each division, compute the return on investment (ROI) 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 16%. 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 1Required 2 Required 3 For each division, compute the return on investment (ROI) in terms of margin and turnover Osaka Yokohama ROI

Answer 1

sales margin ratio (net operating income / sales) % capital turnover ratio (sales / invested capital) 90 return on investment (ROI) Sales margin ratio / capital turnover ratico Schedule osaka yokohama 1.1E+07 37000000 749000 3330000 2675000 18500000 sales net operating income average operating assets C D-BASS | E-A/C90 D/E F_Cx 16%| B- F sales margin ratio capital turnover ratio 1) ROI required income 2) residual income 400 1.75 428000| 321000 200 4.5 2960000 370000 3) yes