Discuss the divisions residual income


Geballe Industries is a division of a major corporation. Last year the division had total sales of $21,420,000, income (NOPAT) of $2,270,520, and invested capital of $6,000,000. The company's minimum required rate of return (cost of capital) is 10%.

Required:

a. What is the division's profit margin?

b. What is the division's investment turnover?

c. What is the division's return on investment (ROI)?

d. What is the division's residual income?

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Accounting Basics: Discuss the divisions residual income
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