The Following Information Is Available About the Status and Operations

question 118

Essay

The following information is available about the status and operations for Division A of Abad Company, which has a minimum required ROI of 20%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division A } \\\text { Divisional investment } & \$ 100,000 \\\text { Divisional profit } & \$ 35,000 \\\text { Divisional sales } & \$ 200,000\end{array}$$
Required:
a. Compute the ROI for Division A.
b. Compute the residual income for Division A.
c. Division A could increase its profit by $8,000 by increasing its investment by $30,000. Compute its total residual income.
d. Division A could increase its profit margin ratio by one percentage point (for example: from 12% to 13%), without increasing total sales or investment. Compute its new ROI.
e. Division A could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new ROI.

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Definitions:

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A professional tasked with examining crime scenes, collecting evidence, and using forensic analysis to solve crimes and identify perpetrators.

Perspiration

The process of sweating or the secretion of fluids by the sweat glands in the skin.

Physiological Measures

Quantitative data gathered about biological processes, such as heart rate, brain activity, or hormone levels, to study bodily functions.

Archival

Pertaining to the use or study of historical documents and records for research.