Question

mework Saved Help Sa A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) Company B C Sales 480,000 680,000 43,000 252,941 17 % 570,000 S $ Net operating income Average operating assets $ 34,980 $ $ 159,000 S 149,000 et Return on investment (ROI) 22% % nces Minimum required rate of return: Percentage 17 % % 14 % Dollar amount 47,000 Residual income 6,000

Answer 1

	A	B	C
Sales	480,000	680,000	570,000
Net operating income	34,980	43,000	20,860 + 6,000 = $26,860
Average Operating assets	159,000	252,941	149,000
Return on investment	22%	17%	26,860/149,000 = 18%
Minimum required rate of return:
Percentage	17%	47,000/252,941 = 19%	14%
Dollar amount	159,000 x 17% = $27,030	47,000	149,000 x 14% = $20,860
Residual income	34,980 - 27,030 = $7,950	43,000 - 47,000 = -$4,000	6,000