Last year Reynolds Ltd. reported the following results:
Required:
a. Using the DuPont method, calculate the company's return on investment for the year just ended.
b. Assuming the company's sales and assets remain the same as last year, by how much would the gross margin percentage have to increase to achieve a 20% return on investment?
c. Assume the company sets a minimum required return of 13%, what would the residual income be?

Question

Last year Reynolds Ltd. reported the following results:
  Required:
a. Using the DuPont method, calculate the company's return on investment for the year just ended.
b. Assuming the company's sales and assets remain the same as last year, by how much would the gross margin percentage have to increase to achieve a 20% return on investment?
c. Assume the company sets a minimum required return of 13%, what would the residual income be?

Quizplus · Accepted Answer

The Answer of Last year Reynolds Ltd. reported the following results:
  Required:
a. Using the DuPont method, calculate the company's return on investment for the year just ended.
b. Assuming the company's sales and assets remain the same as last year, by how much would the gross margin percentage have to increase to achieve a 20% return on investment?
c. Assume the company sets a minimum required return of 13%, what would the residual income be?

Last Year Reynolds Ltd. Reported the Following Results