1. What is the residual income for a firm with $1 million in total capital, $300,000 in net income, and a 20% cost of capital?
A. $100,000
B. $140,000
C. $240,000
D. $500,000
2. Which of these indicates that a firm is efficient?
A. A high average collection period
B. A high day's sales in inventories
C. A low asset turnover
D. A high inventory turnover