A company reported the following for its most recent year of operations: Return on investment Average operating assets Minimum required rate of return 20% $170,000 15% Given this information, the residual income for the year was: %24

A company reported the following for its most recent year of operations: Return on investment Average operating assets Minimum required rate of return 20% $170,000 15% Given this information, the residual income for the year was: %24

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 19P

See similar textbooks

Related questions

Q: Clydesdale Company's residual income is

A: Residual Income: It is the portion of income after reducing the minimum return on the…

Q: ou are evaluating the performance of Department X of Banawe Corporation for the year 2006. You are…

A: Return on Investment is a ratio which is used by companies to measure financial performance. In…

Q: a. D supplied following data are for the latest year of operations: Sales ₱24,480,000; Operating…

A: Return on investment means profit earned as per total investments in percentage. It is calculated by…

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income = Operating income - Minimum return * ( Average operating asset )

Q: Coolbrook Company has the following information available for the past year: River Division…

A: Since the student has posted multiple questions, only the first two are answerable. Thank You.

Q: X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent…

A: >Return on Investment or ROI is the rate of return earned on given average invested assets.…

Q: The following data pertain to Dakota Division's most recent year of operations. Income $ 17,500,000…

A: Residual income=operating income-(Average invested capital*Minimum desired return)

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: Lets understand the basics. Return on investment is a net operating income generated by using its…

Q: Accounting Assume a company reported the following results: Sales $ 400,000 Variable expenses…

A: Lets understand the meaning of residual income. Residual income is an income earned over minimum…

Q: East Mullett Manufacturing earned operating income last year as shown in the following income…

A: Average operating assets = (beginning operating assets + ending operating assets ) / 2 Residual…

Q: Coolbrook Company has the following information available for the past year: River Stream Division…

A: 1) Return on investment (ROI)=Net operating incomeAverage investment assets×100River…

Q: The West Division of Cecchetti Corporation had average operating assets of $695,000 and net…

A: Residual income = Operating income - Minimum required return where, Minimum required return =…

Q: The following data has been provided for a company's most recent year of operations: Return on…

A: Residual income = Average operating assets * ( Return on investment - Minimum required rate of…

Q: Westerville Company reported the following results from last year's operations: Sales Variable…

A: Additional income = ($520,000 x 70%) - $312,000 = $52,000

Q: Spare parts Division of Toyota Company reported the following data last year: Return on investment…

A: Given:

Q: company reported the following data for its past 2 years of operation: Year 1 Return on Investment…

A: Solution: Return on investment for year 2 = 20% Required return for year 2 = 10% Residual income =…

Q: The West Division of Cecchetti Corporation had average operating assets of $639,000 and net…

A: The minimum required rate of return is the expected minimum return from the investment that the…

Q: Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000…

A: Solution... (1). Last year's margin = Net income ÷ sales = $375,000 ÷ $1,500,000 = 0.25 =…

Q: The following data pertain to Dakota Division's most recent year of operations. Income $ 16,000,000…

A: Income = $16,000,000 Average invested capital = $185,000,000 Return on invested capital = 14%

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income = Operating income - (Average operating assets * Minimum rate of return) Average…

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income is the difference of Actual operating income and income at desired rate of return.

Q: Davis Company has established a target rate of return of 15% for all divisions. For the most recent…

A: Residual income= Operating income- Minimum required return Operating income= Sales- expenses =…

Q: A division of Soft Company has the following information for 2020: Average Operating assets P1, 800…

A: Divisional return on investment is the return earned on the capital invested in a particular…

Q: Juniper Design Ltd. of Manchester, England, s a company specializing in providing design services to…

A: Desired income = Average Operating assets x minimum required rate of return = $1,900,000 x 10% =…

Q: The Millard Division's operating data for the past two years are provided be Year 1 Year 2 Return on…

A: Solution: To compute the sales, firstly Average operating assets Year 2 will be computed from…

Q: Required information [The following information applies to the questions displayed below.]…

A: Return on investment indicates the percentage of earning the business is gaining from the…

Q: Foreman Publishing Company’s income for the most recent quarter was $500,000, and the averagenet…

A: Residual income is nothing but the excess income in a particular department over the opportunity…

Q: Division I Division II Income ₱ 02,700,000 ₱ 00,600,000 Average invested capital ₱ 18,000,000…

A: Return on investment is also written as ROI. It is the rate of return earned on the investment. It…

Q: 1. If the company pursues the investment opportunity and otherwise performs the same as last year,…

Q: X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent…

A: Economic value added (EVA): Economic value added indicates the profitability of the projects that…

Q: NUBD Division reported a residual income of P200,000 for the year just ended. The divisi had…

A: Solution: Target Income = Income earned - residual income = 1000000 - 200000 = 800,000

Q: Required information [The following information applies to the questions displayed below.] The…

A: 1. Residual Income - Residual income is income that one continues to receive after the completion of…

Q: Compute the company’s return on investment (ROI) for the period using the ROI formula stated in…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Coolbrook Company has the following information available for the past year: River Division Sales…

Q: 1. Compute X Solutions Residual Income, was the performance of the division acceptable?

A: A Residual income is an income that a person continues to earn after completing a production…

Q: The contribution format income statement for Huerra Company for last year is given below: Total Unit…

A: A financial ratio that calculates the value an investor receives in comparison to the cost of their…

Q: The contribution format income statement for Huerra Company for last year is given below: Total Unit…

A: Solution 1: Particulars Amount Sales $998,000.00 Operating income $80,000.00 Average…

Q: Scottso Division has the following results for the year: * $1,080,000 Revenues Variable expenses…

A: Net income = $1,080,000 - $440,000 - $400,000 = $240,000

Q: 1- what is last years residual income? 2- what is the residual income of this years investment…

A: residual income = Net operating income - Minimum required return in the given question it is said…

Q: The Consumer Products Division of Goich Corporation had average operating assets of $1,550,000 and…

A: The book in which the company records all its transactions initially is termed as journal book. From…

Q: Operating data from Tindall Company for last year follows: Sales........... $900,000 Stockholders'…

A: The turnover ratio indicates the efficiency of a business to generate sales by using its assets. So,…

Q: The following data has been provided for a company's most recent year of operations: Return on…

A: Residual Income - Residual income is derived after deducting operating income from the minimum rate…

Q: Alpha Corporation recorded operating data for its Omega division for the year. Alpha requires its…

Q: Assume a company had net operating income of $300,000, sales of $1,500,000, residual income of…

A: Average operating assets is calculated as minimum required return in dollars dividend by minimum…

Question

A company reported the following for its most recent year of operations:
Return on investment
Average operating assets
Minimum required rate of return
20%
$170,000
15%
Given this information, the residual income for the year was:
24

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The Holmes Division recorded operating data as follows for the past year: Sales Operating Income Average Operating Assets Shareholders' Equity Residual Income $200,000 $ 25,000 $100,000 $ 80,000 $ 13,000 For the past year, what was the minimum required rate of return? A) B) C) D) 12%. 11%. 14%. 13%.
Total annual revenue Total revenue growth rate Terminal revenue growth rate Net operating profit margin (NOPM) Net operating asset turnover (NOAT) Projected total revenue for the following year would be: Select one: O O O $2,850,649 5.0% 2% 8.2% 3.42 a. $2,993,181 b. $2,948,141 c. None of these are correct d. $2,907,662
The following data pertain to Waramutse's most recent year of operations. Income $ 12,500,000 Sales revenue 220,000,000 Average invested capital 51,000,000 Assume that the company’s minimum desired rate of return on invested capital is 11 percent. Required: Compute Waramutse’s residual income for the year
Margin, Turnover, Return on Investment, Average OperatingAssetsElway Company provided the following income statement for the last year:Sales $1,040,000,000Less: Variable expenses 700,250,000Contribution margin $ 339,750,000Less: Fixed expenses 183,750,000Operating income $ 156,000,000At the beginning of last year, Elway had $28,300,000 in operating assets. At the end of the year,Elway had $23,700,000 in operating assets.Required:1. Compute average operating assets.2. Compute the margin and turnover ratios for last year. (Note: Round the answer formargin ratio to two decimal places.)3. Compute ROI. (Note: Round answer to two decimal places.)4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI.5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company isrelatively high (as compared to the lower ROI of a typical manufacturing company).
Your company has net sales revenue of $43 million during the year. At the beginning of the year, fixed assets are $15 million. At the end of the year, fixed assets are $17 million. What the fixed asset turnover ratio? Multiple Choice 2.87 1.34 2.53 269
a. D supplied following data are for the latest year of operations: Sales ₱24,480,000; Operating income ₱1,738,080; Average operating assets ₱6,000,000. Required rate of return 16% 1. What is D's ROI? 1. What is D's residual income?
AMT. Inc.'s net income for this quarter is $500,000. The publicized return on assets (ROA) is 34.5 % . Estimate the firm's total asset to the closet possible. a. $1,500,000 c. $2,450,000 b. $ 1,450,000 d. $2,005,500
The following selected data pertain to the Argent Division for last year: Required: 1. How much is the residual income? 2. How much is the return on investment? (Rounded to four significant digits.)
During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. B. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?
The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.
The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the residual income for each year. Explain how this compares to your findings in part C.
Data table Operating income $ 9,100 Total assets $ 14,000 Current liabilities $ 4,400 Sales $ 35,000 Target rate of return 15% Print Done - Results from Prime Corporation's most recent year of operations are presented in the following table. (Click the icon to view the information.) Requirements 1. Calculate the sales margin, capital turnover, and return on investment (ROI). 2. Calculate the residual income (RI). Requirement 1. Calculate the sales margin, capital turnover, and return on investment (ROI). First enter the formula, then calculate the sales margin. + = Sales margin