Falling Inc. has a 15% required rate of return on investment (i.e., operating assets) in order...

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Falling Inc. has a 15% required rate of return on investment (i.e., operating assets) in order for a division to be considered financially viable. Three of its divisions reported the following information for the past fiscal year: Portsmith Operating assets $14,000,000.00 Horncastle $18,000,000.00 Kingswood $10,000,000.00 Current liabilities Net operating income $600,000.00 $1,890,000.00 $525,000.00 $3,132,000.00 $680,000.00 $1,820,000.00 Required: (A) Compute the ROI and indicate which division has the strongest financial performance. (B) Based on your ROI calculations, is any division underperforming? Discuss. (C) Compute each division's RI and indicate which division has the strongest financial performance. (D) If different divisions within the company face differing business risks, should the required rate of return be the same for each division? Why or why not? Falling Inc. has a 15% required rate of return on investment (i.e., operating assets) in order for a division to be considered financially viable. Three of its divisions reported the following information for the past fiscal year: Portsmith Operating assets $14,000,000.00 Horncastle $18,000,000.00 Kingswood $10,000,000.00 Current liabilities Net operating income $600,000.00 $1,890,000.00 $525,000.00 $3,132,000.00 $680,000.00 $1,820,000.00 Required: (A) Compute the ROI and indicate which division has the strongest financial performance. (B) Based on your ROI calculations, is any division underperforming? Discuss. (C) Compute each division's RI and indicate which division has the strongest financial performance. (D) If different divisions within the company face differing business risks, should the required rate of return be the same for each division? Why or why not?

Answer rating: 100% (QA)

A Return on Investment ROI is calculated as Net Operating Income divided by Operating Assets For Por... View the full answer