The Central Division of AAA, Inc

question 45

Essay

The Central Division of AAA, Inc., has operating income of $64,000 on sales revenue of $640,000.Divisional operating assets are $320,000 and management of AAA has determined that a minimum return of 12% should be expected from all investments.
(a.)Using the DuPont model, calculate the Central Division's margin, turnover, and ROI.
(b.)Calculate the Central Division's residual income.

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Definitions:

Open-Door Policy

A management approach that encourages open communication and direct interaction between employees and higher-level management.

Peer Review

The evaluation of work or performance by other people in the same field in order to maintain or enhance quality and credibility.

Open-Door Policy

A management approach where employees are encouraged to directly communicate their concerns, suggestions, or feedback to senior management without going through formal channels.

Arbitration

A method of dispute resolution involving a neutral third party who listens to both sides and then makes a binding decision.