Mejii isetan corp of Japan has 2 regional divisions with HQ in osaka and yokohama.
The data of the two divisions is as below
|
|
Osaka
|
Yokohama
|
|
Sales
|
10500000
|
35000000
|
|
Net operating Income
|
630000
|
2800000
|
|
Average operating assets
|
3500000
|
17500000
|
Required
1. For each division , comnpute the return on investment in terms of margin and turnover.
2. Assume tht the company evaluates performance using residual income and that the rate of return for any division is 15%, Compute the residual income for each division.
3. Is yokohama's greater residual income an indication that he is better managed.