Win Company Has the Following Data Dixie Company Has a Target ROI of 20% and a A&\text

question 64

Essay

Win Company has the following data: $\begin{array}{lll}&\text { Division } A&\text { Division } B\\\text { Sales } & \$ 400,000 & \$ 300,000 \\\text { Contribution margin } & 160,000 & 125,000 \\\text { Operating income } & 80,000 & 30,000 \\\text { Average operating assets } & 320,000 & 200,000 \\\text { Cost of capital } & 15 \% & 15 \%\end{array}$ Dixie Company has a target ROI of 20% and a 0% income tax rate.
Required: 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:

Dividend Record

The date on which a company records the shareholders eligible to receive the declared dividend.

Financial Condition

It describes the overall state of a company's monetary resources, liabilities, and investment activities at a given time.

Investor Expectations

The assumptions or forecasts made by investors about future performance or trends of a particular security, market, or the economy as a whole.

Deficit

A debit balance in the retained earnings account.