Problem

Investment center analysis; ROI and residual income The Central Division of American, Inc....

Investment center analysis; ROI and residual income The Central Division of American, Inc., has operating income of $19,200 on sales revenue of $160,000. Divisional operating assets are $100,000, and management of American has determined that a minimum return of 16% should be expected from all investments.

Required:

 a. Using the DuPont model, calculate The Central Division’s margin, turnover, and ROI.


b.Calculate The Central Division”s residual income.

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