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problem: Milano Corporation has three operating divisions and requires a 12 percent return on all investments.  Selected information is presented here:                                  

                                                 Divison A       Division B        Division C

Revenues                                   $500,000                 

Operating Income                         $60,000                             $80,000

Operating Assets                         $250,000        $600,000      

Margin                                                                                    12%    

Turnover                                                             1 turn           2 turns

ROI                 

Residual Income                                                                      $20,000

Required:

[A] Compute the missing amounts for each division                         

[B] Make comment on the relative performance of each division                         

[C] Give some ex to show how residual income improves decision making at the divisional level

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M919921

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