Consider the following data for the most recent years from a division: Year 2020 2021 Sales $
Fantastic news! We've Found the answer you've been seeking!
Question:
Consider the following data for the most recent years from a division:
| Year | 2020 | 2021 | ||||
| Sales | $ | 1,800,000 | $ | 1,500,000 | ||
| Operating Income | $ | 720,000 | $ | 600,000 | ||
| Investment | $ | 3,060,000 | $ | 2,400,000 | ||
Assume that the minimum rate of return is 8%.
Two requirements:
Required 1: Following what we discussed in the lecture videos, analyze the change in the financial performance using basic measures, such as return on sales, asset turnover, return on investment, and residual income. In your own words, interpret what each measure and number tell us.
Required 2: A proposed new project, which requires an additional $1,000,000 investment, will generate $150,000 additional operating income. Should the division accept this new project and why? Show your work and reasoning.
Expert Answer:
1 Operating income 100 Sales Return on Sales 2020 is720000 100 1800000 40 600000 100 1500000 4... View the full answer
Posted Date:
