Exercise 10-9 (Static) Return on Investment (ROI) and Residual Income Relations [LO10-1, LO10-2]
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector
industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign.)
Sales
Net operating income
Average operating assets
Return on investment (ROI)
Minimum required rate of return:
Percentage
Dollar amount
Residual income
Company A
$ 9,000,000
$ 3,000,000
18 %
16 %
Company B
$ 7,000,000
$ 280,000
$
14 %
320,000
%
Company C
$ 4,500,000
$ 1,800,000
$
%
15 %
90,000