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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?

Answer & Explanation Solved by verified expert
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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