Question

The following information for companies X, Y, and Z is incomplete. Supply the missing data. (Negative...

The following information for companies X, Y, and Z is incomplete. Supply the missing data. (Negative amounts should be indicated by a minus sign. Round your return on investment to 1 decimal place. Omit the "$" and "%" signs in your response).

         

Company X Company Y Company Z
   Operating income $ 220,000 $ $
   Sales $ $ $
   Invested capital $ $ 6,000,000 $ 32,000,000
   Return on sales 32 % 40 % %
   Capital turnover 20 % % 30 %
   Return on investment % 20 % 15 %
   Minimum acceptable return 10 % 12 % %
   Residual income $ $ $ 960,000
Business   Accounting   
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Answer #1

Calculate missing amount

Company X Company Y Company Z
Operating income 220000 6000000*20% = 1200000 32000000*15% = 4800000
Sales 220000*100/32 = 687500 6000000/2 = 3000000 32000000*30% = 9600000
Invested capital 687500*100/20 = 3437500 6000000 32000000
Return on sales 32% 40% 4800000/9600000 = 50%
Capital turnover 20% 20/40 = 50% 30%
Return on investment 220000*100/3437500 = 6.4% 20% 15%
Minimum acceptable return 10% 12% 3840000/32000000 = 12%
Residual income 220000-343750 = -123750 1200000-(6000000*12%) = 480000 960000
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