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Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama....

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Accounting

Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

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A. For each division, compute the return on investment (ROI) in terms of margin and turnover.

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B. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division.

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C. Is Yokohamas greater amount of residual income an indication that it is better managed?

Division Osaka Yokohama Sales Net operating income Average operating assets $ 10,300,000 $ 33,000,000 $721,000 $ 2,970,000 $ 2,575,000 $ 16,500,000

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