E1020A similar to i Question Help Zolum a national manufect

E10-20A (similar to) i Question Help * Zolum, a national manufecturer of lawn mowing and snow blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars) EEB (Click the icon to view the information ) Rcad the eqremerS Requirement 1, Calculale cach division\'s ROI First enter the formula, then calculats each division\'s ROl using the expanded formula.

Solution

SOLUTION

S.No.	Particulars	Residential ($)	Professional ($)
1.	ROI = Operating income / Total assets
	Operating income	70,200	152,040
	Total assets	195,000	362,000
	ROI	36%	42%
2.	Sales margin = Operating income / Total sales
	Operating income	70,200	152,040
	Total sales	585,000	1,013,600
	Sales margin	12%	15%
3.	Capital turnover = Total sales / Total assets
	Total sales	585,000	1,013,600
	Total assets	195,000	362,000
	Capital turnover	3 times	2.8 times
4.	ROI = Sales margin * Capital turnover
	Sales margin	12%	15%
	Capital turnover	3	2.8
	ROI	36%	42%
5.	Residual income = Operating income - (Required rate * Total assets)
	Operating income	70,200	152,040
	Required rate	24%	24%
	Total assets	195,000	362,000
		46,800	86,880
	Residual income	23,400	65,160