Refer to the preceding problem about Calrisian Enterprises.
The following data pertain to three divisions of Calrisian Enterprises. The company€™s required rate of return on invested capital is 8 percent.

Required:
1. Explain three ways the Division I manager could improve her division€™s ROI. Use numbers to illustrate these possibilities.
2. Suppose Division II€™s sales margin increased to 25 percent, while its capital turnover remained constant. Compute the division€™s newROI.

Transcribed Image Text:

Division I Division II Division III ...$40,000,000 .$8,000,000 $10,000,000 Sales revenue Income Average investment. Sales margin Capital tumover ROI Residlual income S1,600,000 20% 25% $480,000