The financial results for the past two years for Ornamental Iron, a division of Iron Horse Company, follow.

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

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Iron Horse Company Ornamental Iron Division Balance Sheet December 31 This Year Last Year Assets Cash Accounts receivable Inventory Other current assets Plant assets Total assets 5,000 10,000 30,000 600 128,300 173,900 Liabilities and Stockholders' Equity 13,900 90,000 70,000 173,900 3,000 8,000 32,000 600 120,300 163,900 Current liabilities Long-term liabilities Stockholders'equity Total liabilities and stockholders' equity 10,000 93,900 60,000 163,900 Iron Horse Company Ornamental Iron Division Income Statement For the Years Ended December 31 Sales Cost of goods sold Selling and administrative expenses Operating income Income taxes After-tax operating income This Year $180,000 (100,000) (27.500) 52,500 17,850 34,650 Last Year $160,000 90,000) (26.500) S 43,500 14,790 28,710