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    Ratio calculation

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    Sprint Company has the following data for 2011:

    Division A Division B
    Sales $400,000 $300,000
    Contribution margin 160,000 125,000
    Operating income 80,000 30,000
    Average operating assets 320,000 200,000
    Weighted average cost of capital 15% 15%

    Sprint Company has a target ROI of 20 percent.


    Calculate the following amounts for each division:
    Make sure you have answers for Division A & B. Also make sure your answers are in the appropriate format.
    a. Margin ratio
    b. Turnover ratio
    c. ROI
    d. Residual income
    e. EVA

    Must show work.

    © BrainMass Inc. brainmass.com December 15, 2020, 6:28 pm ad1c9bdddf

    Solution Preview

    a. Margin = Operating Income/Sales
    Division A
    Margin = 80,000/400,000 = 20%
    Division B = 30,000/300,000 = 10%

    b. Turnover Ratio = Sales/Average Operating Assets
    Division ...

    Solution Summary

    The solution explains how to calculate margin ratio, turnover ratio, ROI, Residual income and EVA