Sprint Company Has the Following Data for the Current Year

question 69

Essay

Sprint Company has the following data for the current year:
$\begin{array}{lrr}&\text { Division } A&\text { Division } B\\\text { Sales } & \$ 400,000 & \$ 300,000 \\\text { Contribution margin } & 160,000 & 125,000 \\\text { Operating income } & 80,000 & 30,000 \\\text { Average operating assets } & 320,000 & 200,000 \\\text { Weighted average cost of capital } & 15 \% & 15 \%\end{array}$ Sprint Company has a target ROI of 20 percent.
Calculate the following amounts for each division:
a.Margin ratio
b.Turnover ratio
c.ROI
d.Residual income
e.EVA

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Definitions:

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