Big Sky Industries is a division of a major corporation.The following data are for the latest year of operations: $$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 12,700,000 \
\hline \text { Net operating income } & \$ 1,054,100 \
\hline \text { Average operating assets } & \$ 5,000,000 \
\hline \text { The company's minimum required rate of } & 16 \% \
\text { return } & \
\hline
\end{array}$$
Required:
a.What is the division's return on investment (ROI)?
b.What is the division's residual income?

Question

Big Sky Industries is a division of a major corporation.The following data are for the latest year of operations: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 12,700,000 \
\hline \text { Net operating income } & \$ 1,054,100 \
\hline \text { Average operating assets } & \$ 5,000,000 \
\hline \text { The company's minimum required rate of } & 16 \% \
\text { return } & \
\hline
\end{array}$$
Required:
a.What is the division's return on investment (ROI)?
b.What is the division's residual income?

Quizplus · Accepted Answer

The Answer of Big Sky Industries is a division of a major corporation.The following data are for the latest year of operations: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 12,700,000 \
\hline \text { Net operating income } & \$ 1,054,100 \
\hline \text { Average operating assets } & \$ 5,000,000 \
\hline \text { The company's minimum required rate of } & 16 \% \
\text { return } & \
\hline
\end{array}$$
Required:
a.What is the division's return on investment (ROI)?
b.What is the division's residual income?

Big Sky Industries Is a Division of a Major Corporation