The owner of Oriole Toy Manufacturing Company has recently expanded his business in order to add an additional product line. Inaddition to toys, the company now sells shirts. The company has a minimum rate of return of 11%.SalesControllable marginAverage operating assetsToys$605,000125,000905,000Residual Income $Compute the residual income for both investment centers. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).)Shirts$205,00015,000214,000Toys$Shirts

ToysShirtsAverage operating assets$905,000$214,000Minimum rate of return11%11%Minimum amount of…

Answered: The owner of Oriole Toy Manufacturing…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 2STP

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A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ A 470,000 160,000 15 % 16 % $ $ $ Company B 680,000 43,000 19 % 57,000 % C $ 560,000 $ 145,000 $ % 10 % 5,000
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ A 9,000,000 3,000,000 C 18 % 16 % $ $ $ Company B 7,000,000 280,000 14 % 320,000 % $ $ $ C 4,500,000 1,800,000 % 15 % 90,000
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income A $ 9,060,000 $ 3,020,000 20 % 18 % $ $ $ Company B 7,100,000 285,000 12 % 332,500 % $ 4,590,000 $ 1,836,000 $ % 11 % 91,800
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: Note: Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent. Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income A $ 9,180,000 $ 3,060,000 13 % 11 % $ $ $ Company B 7,300,000 296,000 10 % 355,200 % C $ 4,770,000 $ 1,908,000 $ % 16% 95,400
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income A $ 9,210,000 $ 3,070,000 14 % 12 % $ $ $ Company B 7,350,000 300,000 12 % 250,000 % C $ 4,815,000 $ 1,926,000 $ % 17 % 96,300
Required Information [The following Information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12%. Complete this question by entering your answers in the tabs below. Numerator: Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,173,000…
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income A Company B C $ 9,180,000 $ 7,300,000 $ 296,000 $ 4,770,000 $ 3,060,000 $ 1,908,000 13 % 10 % % 11 % $ 355,200 % 16 % EA $ 95,400
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ Company A 480,000 156,000 21 % 18 % Company B $ 740,000 GA GA $ 53,000 $ 69 18 % 54.000 % $ $ $ Company C 520,000 155,000 % 12 % 5,000
! Required information [The following information applies to the questions displayed below.] The following information is provided for each Investment Center. Investment Center Cameras Phones Computers Income $ 6,000,000 2,295,000 1,050,000 Assume a target income of 15% of average assets. Compute residual income for each center. Note: Enter losses with a minus sign. Residual income (loss) Cameras Average Assets $ 26,900,000 15,300,000 13,600,000 Phones Computers
Megamart provides the following information on its two investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 Income $ 3,173,000 2,286,000 Average Assets $ 16,700,000 12,700,000 Exercise 22-10 (Algo) Computing return on investment and residual income; investing decision LO A1 1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? 2. Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the most residual income? 3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 12%.
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Do not round your intermediate calculations.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ Company A 310,000 151,000 18 % 16 % Company B $ 800,000 $ 50,000 $ 19 % 41,000 % Company C $ 660,000 $ $ 147,000 % 9 % 4,000
Golden Goodness (GG) has an investment center that had the following data: Operating Income $28,000 Sales $350,000 Invested assets $175,000 PMB has set a minimum acceptable rate of return at 14%. Using the information, answer the following questions. You must include what type of number it is (%, $, etc.) Part A: What is the residual income? Part B: Show calcualtions on how you got answer

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