Provide the missing data for the following situations:
Red Division White Division Blue Division
Sales $? $10,000,000 $?
Net operating income $200,000 $400,000 $288,000
Operating assets $? $? $1,600,000
Return on investment 0.16 0.10 ?
Return on sales 0.04 ? 0.12
Investment turnover ? ? 1.5
Answer: Red Division:
ROI = ROS × IT
0.16 = 0.04 × IT
IT = 4.0
ROS = Income/Sales
0.04 = $200,000/Sales
Sales = $5,000,000
IT = Sales/OA
4 = $5,000,000/OA
OA = $1,250,000
White Division:
ROS = $400,000/$10,000,000 = 0.04
IT = ROI/ROS = 0.10/0.04 = 2.5
OA = S/IT = $10,000,000/2.5 = $4,000,000
Blue Division:
Sales = IT × OA = 1.5 × $1,600,000 = $2,400,000
ROI = 0.12 × 1.5 = 0.18
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