Sousa Corporation Provides the Following Financial Information Calculate the Residual Income of Sousa Corporation

question 52

Multiple Choice

Sousa Corporation provides the following financial information: $$\begin{array} { | l | r | } \hline \text { Minimum acceptable operating income } & \$ 560,000 \\\hline \text { Average total assets } & \$ 2,000,000 \\\hline \text { Operating income } & \$ 715,000 \\\hline \text { Return on investment } & 36 \% \\\hline \text { Net sales } & \$ 850,000 \\\hline\end{array}$$ Calculate the residual income of Sousa Corporation.

• A) $1,440,000
• B) $290,000
• C) $155,000
• D) $554,125

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Definitions:

Shares

Stakeholding units in a business or financial asset that entitle owners to a fair portion of distributed profits, or dividends.

Market-To-Book Ratio

A financial ratio that compares a company's market value to its book value, indicating how much investors are willing to pay above the net asset value.

Price-Earnings Ratio

A valuation metric for a company, calculated as market value per share divided by earnings per share.

Book Value

The net value of a company's assets, subtracting the total liabilities from the total assets, often used to assess a company's financial health.