Trees Unlimited has one greenhouse located in each of Corner Brook, Grand Falls, and Conception Bay...

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General Management

Trees Unlimited has one greenhouse located in each of CornerBrook, Grand Falls, and Conception Bay South. Operating results ofthe past year for each location are in the following table:
Corner Brook
Grand Falls
Conception Bay South
Sales
$300,000
$400,000
$450,000
Net Income
60,000
64,000
45,000
Beginning operating assets
200,000
100,000
80,000
Ending operating assets
300,000
300,000
100,000
Required
a. Compute the margin, turnover and rate of return for eachlocation.
b. Trees Unlimited required rate of return is 30%. Compute theresidual income for each
      location.
c.   Trees Unlimited would like to expand the marketcoverage in each community by opening
retail store. The opportunity willrequire an investment in operating assets of $500,000. It isexpected sales will be $350,000 operating expenses of$180,000.   Based on residual income which communitywould be interest in retail store opportunity? Which would beinterested if evaluated based on return on investment?

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4.1 Ratings (602 Votes)

a The net profit margin Net Income sales100 For Corner Brook 60000 300000100 20 For Grand Falls 64000400000100 16 For Conception Bay South 45000450000100 10 See Answer

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	Corner Brook	Grand Falls	Conception Bay South
Sales	$300,000	$400,000	$450,000
Net Income	60,000	64,000	45,000
Beginning operating assets	200,000	100,000	80,000
Ending operating assets	300,000	300,000	100,000