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190.     Urbandale Company has two fabric divisions - Linen and Cotton. The following information is available:

 

 

 

 

Linen

Cotton

 

 

 

Revenue

$200,000

 

$250,000

 

 

 

Income

30,000

 

90,000

 

 

 

Invested capital

100,000

 

150,000

 

 

 

Cost of capital

12%

 

10%

Compute the following for each division:

a.     ROI

b.     return on sales

c.     capital turnover

d.     residual income

191.     The following data are available for the three divisions of Barnum Company:

 

 

 

 

 

Division X

Division Y

Division Z

 

 

Income

 

(a)

$45,000

(i)

 

 

Revenue

 

(b)

(e)

$84,000

 

 

ROI

 

15%

(f)

12%

 

 

Invested capital

$150,000

(g)

$35,000

 

 

Return on sales

8%

9%

(j)

 

 

Cost of capital

12%

(h)

10%

 

 

Capital turnover

(c)

2.5

(k)

 

 

Residual income

(d)

$15,000

(l)

Required:

 

Provide the missing data.

LEARNING OBJECTIVES 4 and 5

192.     The Scotch Company has gathered the following information:

Total assets

$4,000,000

 

 

 

Total current liabilities

600,000

 

 

 

Total liabilities

800,000

 

 

 

Revenue

2,500,000

 

 

 

Expenses

900,000

Compute:

a.     ROI assuming invested capital is equal to total assets

b.     ROI assuming invested capital is equal to total assets minus current liabilities

c.     ROI assuming invested capital is equal to stockholders' equity

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