Return On Investment (ROI) and Residual Income
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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. Show the formulas used:
Company
A B C
Sales $400,000 $750,000 $600,000
Net Operating Income $ ? $45,000 $ ?
Average Operating Assets $160,000 ? $150,000
Return On Investment (ROI) 20% 18% % ?
Minimum Required Return Rate
Percentage 15% % ? 12%
Dollar Amount $ ? $50,000 $ ?
Residual Income $ ? $ ? $6,000
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Solution Summary
The solution explains how to determine the missing amounts using return on investment and residual income calculations.
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