Performance evaluation-residual income

Reference no: EM1359670

Williamson Group operates a chain of bookstores. A recent business expansion plan resulted in the opening of more than 25 new stores. The Upland store has one more feature that the Stowe store does not have-a small coffe shop. Early indications are that the coffee shop has driven up the location's revenues and profits. Operating data for two of these stores is provided below:

Upland Stowe

ROI 18.75% 14.0%

Net operating income ? ?

Minimum required return 15% 15%

Average operating assets $200,000 $150,000

Residual income ? ?

A) Calculate net operating income and residual income for each division.

B) Compare the two divisions and discuss the usefulness of ROI and residual income for the purpose of comparing the divisions.

Reference no: EM1359670

Questions Cloud

Explain there are also two other witnesses : Explain There are also two other witnesses to the statement in the room and as observers

Create form to accept an arrival and departure date : Create a form that accepts an arrival and departure date for a reservation from the user and then calculates the number of nights and the total price for the reservation.

Description of significant ethical-legal-sociocultural fact : Give a description of a significant ethical, legal, and sociocultural fact on each one relating to tests and measurement in counseling and explain why they are sigificant?

Project evaluation : Kinky Copies may buy a high volume copier. The machine cost $100,000 and will be depreciated straight-line over five years to a salvage value of $20,000.

Performance evaluation-residual income : Williamson Group operates a chain of bookstores. A recent business expansion plan resulted in the opening of more than 25 new stores. The Upland store has one more feature that the Stowe store does not have-a small coffe shop.

Determine the approximate cost of cash discount : XieCorp is analyzing credit terms of each of three suppliers, A, B, and C. Calculate the approximate cost of giving up the cash discount.

Legal issues associated with psychological testing : What are at least two legal issues associated with psychological testing? How do these issues affect the field of psychological testing?

Explain project demonstrating excellence : Explain Each student is required to write a Project Demonstrating Excellence and The purpose of the assignment is to give the student a means of displaying their analytical reasoning

Governmental accounting and interest expenditure : It is sometimes said that in debt service funds, the accounting for interest revenue is inconsistent with that for interest expenditure. Explain. What is the rationale for this seeming inconsistency?

User Account

All Pages