Tundra Services Company
Tundra Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
| Sales |
|
|
18500000 |
| Net operating income |
|
|
4700000 |
| Average operating assets |
|
|
35700000 |
Required:
Compute the margin for Tundra Services Company.(Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Margin
Compute the turnover for Tundra Services Company. (Round your answer to 2 decimal place.)
Turnover
Compute the return on investment (ROI) for Tundra Services Company. (Round your intermediate calculations and final answer to 2 decimal places. Omit the "%" sign in your response.)
Selected sales and operating data for 3 divisions of 3 different companies are given below:
|
|
|
|
Division A |
Division B |
Division C |
| Sales |
|
|
|
58000000 |
9800000 |
8900000 |
| Average operating assets |
|
|
|
1450000 |
4900000 |
2225000 |
| Net operating income |
|
|
|
284200 |
872200 |
191350 |
| Minimum required rate of return |
|
|
|
0.18 |
17.8 |
15 |
|
|
|
|
|
|
|
Required
Compute the return on investment (ROI) for each division, using the formulas stated in terms of margin and turnoverComputer the residual income for each division.
Assume that each division is presented with an investment opportunity that would yield a rate of return of 20%.
If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?