Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osak

Question

Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow Division Sales Net operating income Average operating assets Osaka Yokohama 3,000,000 $ 9,000,000 $ 210,000 $ 720,000 $ 1,000,000 S 4,000,000 Required 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations. Enter your answers as a percent (i.e., 0.12 should be entered as 12).) Osaka Yokohama ROI that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15% Compute the residual income for each division. Yokohama

Explanation / Answer

1 ROI: Osaka 21% =210000/1000000 Yokohama 18% =720000/4000000 2 Osaka Yokohama Average operating assets 1000000 4000000 net operating income 210000 720000 Minimum required return 150000 600000 Residual income 60000 120000 3 No

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