Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Las Vegas Dallas Tampa Net Income Assets $960,000 $4,000,000 1,200,000 8,000,000 2,040,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Rank Las Vegas Dallas 96 96 " % 수 Tampa b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income. RI Las Vegas $ Dallas Tampa Check Rank
Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit centers in the following locations with the following net incomes and total assets: Las Vegas Dallas Tampa Net Income Assets $960,000 $4,000,000 1,200,000 8,000,000 2,040,000 12,000,000 a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI. Round ROI to the nearest whole percentage. ROI Rank Las Vegas Dallas 96 96 " % 수 Tampa b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to lowest based on residual income. RI Las Vegas $ Dallas Tampa Check Rank
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter15: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 2P
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Return on Investment and Residual Income Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Compary has profit centers in the following locations with the following net incomes and total assets: \table[[,Net Income,Assets],[Las Vegas,$960,000,$4,000,000
Transcribed Image Text:Return on Investment and Residual Income
Johnson Company has two sources of funds: long-term debt and equity capital. Johnson Company has profit
centers in the following locations with the following net incomes and total assets:
Las Vegas
Dallas
Tampa
Net Income
Assets
$960,000 $4,000,000
1,200,000 8,000,000
2,040,000 12,000,000
a. Calculate ROI for each profit center and rank them from highest to lowest based on ROI.
Round ROI to the nearest whole percentage.
ROI
Rank
Las Vegas
Dallas
Tampa
%
%
4
b. Calculate residual income for each profit center based on a desired ROI of 5% and rank them from highest to
lowest based on residual income.
RI
Las Vegas $
Dallas
Tampa
Check
Rank
Next
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