Chapter 10: Applying Excel: Exercise

Requirement 2:

Revise the data in your worksheet as follows:

If your formulas are correct, you should get the correct answers to the following questions.

a. What is the ROI?

b. What is the residual income? (Negative amount should be indicated by a minus sign.)

c. Why is the residual income positive?

Data
Sales	$25,000,000
Net operating income	$3,000,000
Average operating assets	$10,000,000
Minimum required rate of return	25%
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Compute the ROI
Margin	?
Turnover	?
ROI	?
Compute the residual income
Average operating assets	?
Net operating income	?
Minimum required return	?
Residual income	?