ROI and Residual Income:Basic Computations
Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of percent with a percent tax rate. Selected operating data for three divisions of the company follow.
Trucking Division Seafood Division Construction Division
Sales $ $ $
Operating assets
Net operating income
a Compute the return on investment for each division. Round answers to three decimal places.
Trucking ROI Answer
Seafood ROI Answer
Construction ROI Answer
