Answer the Following Questions Using the Information Below:
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question 85

Essay

Answer the following questions using the information below:
The top management at Watersport Company, a manufacturer of water sport equipment, is attempting to recover from a fire that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged:
$\begin{array} { l r r r r } & \text { Jetski Division } & \text { Boat Division } & \text { Surfboard Division } \\\text { Sales } & \$ 7500000 & ( \mathrm { a } ) & \$ 1800000 \\\text { Net operating profit } & \$ 750000 & \$ 1080000 & \$ 450000 \\\text { Operating assets } & ( \mathrm { b } ) & ( \mathrm { c } ) & \$ 1500000 \\\text { Retum on investment } & 0.20 & 0.10 & ( \mathrm {~d} ) \\\text { Retum on sales } & ( \mathrm { e } ) & 0.12 & 0.25 \\\text { Investment turnover } & \text { (f) } & ( \mathrm { g } ) & 1.2\end{array}$
-Museum Corporation uses the investment centre concept for the museums that it manages.Select operating data for three of its museums for 2017 are as follows:
$$\begin{array} { | l | r | r | r | } \hline & { \text { Melbourne } } & { \text { Canberra } } & { \text { Brisbane } } \\\hline \text { Revenue } & \$ 600000 & \$ 750000 & \$ 900000 \\\hline \text { Operating assets } & 300000 & 250000 & 350000 \\\hline \text { Net operating profit } & 51000 & 56000 & 59000 \\\hline\end{array}$$
Required:
a.Compute the return on investment for each division.
b.Which museum manager is doing best based only on ROI? Why?
c.What other factors should be included when evaluating the managers?
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Definitions:

Residuals

The differences between observed values and the values predicted by a model, used in regression analysis to assess the fit of the model.

Regression Model

A statistical model used to understand the relationship between one dependent variable and one or more independent variables.

Multiple Linear Regression

A method in statistics that establishes the connection between one dependent variable and multiple independent variables by applying a linear equation to the data collected.

Salary

Salary is the fixed regular payment, typically expressed on an annual basis, made by an employer to an employee, especially a professional or white-collar worker.