Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected...
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Accounting
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
Division
Osaka Yokohama
Sales $ 9, 600, 000 $ 26, 000, 000
Net operating Income $ 672, 000 $ 2, 340, 000
Average Operating Assets $ 3, 200, 000 $ 13, 000 ,000
Required:
1. For each division, compute the rate of return on investment (ROI) in terms of margin and turnover.
2. 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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