Three divisions of Jameson Co. report the following sales and operating data: Sales Average operating...
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Three divisions of Jameson Co. report the following sales and operating data: Sales Average operating assets Operating income Minimum required rate of return Fitness Training $690,000 $172,500 $ 27,600 124 Spa Services $890,000 $222,500 $ 35,600 148 Athletic Wear $700,000 $140,000 $ 35,000 128 bok Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. ROI % Fitness training Spa services Athletic wear % % 2. Compute the residual income for each division Fitness Training Spa Services Athletic Wear Residual income 3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 19% a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Fitness Training Sou Services Athletic Wear
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