Data follow for the Construction Division of D. Jack Inc.:
Year 1 Year 2
Sales $ 52,000,000 $ 57,750,000
Operating income 7,280,000 7,507,500
Average operating assets 200,000,000 262,500,000
(Note: Round all answers to two decimal places.)
Required:
1. Compute the margin and turnover ratios for each year.
2. Compute the ROI for the Construction Division for each year.
The Tuxedo Division of Shamus O'Toole Company had operating income last year of $340,000 and average operating assets of $3,500,000. O'Toole's minimum acceptable rate of return is 7 percent. (Note: Round all answers to two decimal places.)
Required:
1. Calculate the residual income for the Tuxedo Division.
2. Was the ROI for the Tuxedo Division greater than, less than, or equal to 7 percent?