Question

Supply the missing information in the following table for Greenwood Company : Sales ? ROI 12%...

Supply the missing information in the following table for Greenwood Company

:

Sales

?

ROI

12%

Investment in operating assets

$270,000

Operating income

?

Turnover

?

Residual income

?

Operating profit margin

0.10

Desired rate of return

11%

0 0
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Answer #1
Sales = Operating Income/Operating Profit Margin = 32400/10% $324,000
ROI  = Operating income/ Investment in operating assets 12%
Investment in operating assets 270000
Operating income = Investment in OA x ROI (270,000 x 12%) $ 32,400.00
Turnover = Sales / Investment in operating assets = $324000/270,000 1.20
Residual income = Operating Income - (desired Rate of Return x Investment in OA) = ($32400 - (11% x 270,000) $   2,700.00
Operating profit margin = Operating income /sales 10%
Desired rate of return 11%
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