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What is the residual income

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Reference no: EM13325458

Johnson Cleaners

Data
Sales $25,000,000
Net operating income $3,000,000
Average operating assets $10,000,000
Minimum required rate of return 25%

Enter a formula into each of the cells marked with a ? below

Review Problem: Return on Investment (ROI) and Residual Income

Compute the ROI
Margin ?
Turnover ?
ROI ?


Compute the residual income
Average operating assets  ? 
Net operating income  ? 
Minimum required return  ? 
Residual income  ? 

Requirement:

Revise the data in your worksheet as follows:

543_What is the residual income.png

What is the ROI?

What is the residual income?

Why is the residual income positive?

Average operating assets exceed net operating income

The ROI is less than the minimum required rate of return

Sales exceed net operating income

Sales exceed average operating assets

The ROI exceeds the minimum required rate of return

The ROI equals the minimum required rate of return

Reference no: EM13325458

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