The financial results for the past two years for Ornamental Iron, a division of the Iron Foundry Company, follow.
Iron Foundry Company
Ornamental Iron Division
Balance Sheet
December 31, 20x8 and 20x7

Liabilities and Stockholders' Equity

Iron Foundry Company
Ornamental Iron Division
Income Statement
For the Years Ended December 31, 20x8 and 20x7

Required
1. Compute the division's profit margin, asset turnover, and return on investment for 20x8 and 20x7. Beginning total assets for 20x7 were $157,900. Round to two decimal places.
2. The desired return on investment for the division has been set at 12 percent. Compute Ornamental Iron's residual income for 20x8 and 20x7.
3. The cost of capital for the division is 8 percent. Compute the division's economic value added for 20x8 and 20x7.
4. Manager Insight: Before drawing conclusions about this division's performance, what additional information would you want?

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20x8 20x7 Assets Cash Accounts receivable Inventory Other current assets Plant assets Total assets $5,000 3,000 8,000 0,000 32,000 600 120,300 $173,900 $163,900 10,000 600 128,300 Current liabilities Long-term liabilities Stockholders' equity Total tiabilities and stockholders' equity $ 13,900 10,000 90,000 93,900 70,000 60,0006 $163,900 $173,900 20x8 20x7 Sales Cost of goods sold Seling and administrative expenses Operating income Income taxes After-tax operating income $180,000 $160,000 90,000 26,500 S 52,500 $ 43,500 14,790 S 34,650 28,710 100,000 27,500 17,850