Question 1: The Southern Division of Amelia Corporation had sales of $6,500,000 and operating income of $1,200,000 last year. The total assets of the Southern Division were $3,000,000, while current liabilities were $450,000. Amelia Corporation's target rate of return is 10%, while its weighted average cost of capital is 6%. The effective tax rate for the company is 30%. What is the Southern Division's Return on Investment (ROI)?
Question 2: The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year. The total assets of the Pasta Division were $2,750,000, while current liabilities were $330,000. Whole Grain Corporation's target rate of return is 12%, while its weighted average cost of capital is 8%. The effective tax rate for the company is 30%. What is the Pasta Division's Residual Income (RI)?
What is the Pasta Division's capital turnover?