Mark manages a small family-owned amusement park. He believes the park can increase its profits if its owners will buy three foo
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Answer:
profit margin: 6.04%
Assets turnover: 2.08
ROI 25.89%
Residual Income 137,330
Explanation:
<u><em>profit margin:</em></u>
income/sales = 326,480/5,404,000 = 0.060414507 = 6.0414507%
<u><em>Assets turnover:</em></u>
(2,561,000 + 2,629,000)/2 = 2,595,000 average assets
5,404,000/2,595,000 = 2.082466281 Assets TO
<u><em>ROI</em></u>
(1,206,000+1,316,000)/2 = 1,261,000 average equity
326,480/1,261,000 = 25.890563%
<u>Residual Income:</u>
current income - income at desired RoR
That means calculate which income generates a ROI of 15% which is the minimum required return:
ROI = income / equity = 0.15
X/1,261,000 = 0.15
X=1,261,000 x 0.15 = 189,150
Now we calculate the diference between this number and the current income.
326,480 - 189,150 = 137,330 Residual Income
Available Options Are:
A. 401 units
B. 294 units
C. 441 units
D. 305 units
Answer:
Option C. 441 Units
Explanation:
The first thing would be to analyze the situation. It is crystal clear in the Accessibility Elite table that the accessibility of Digby products are 2nd largest among the rival companies.
Now we will look at whether the company has taken advantage of its second largest accessibility position or not. This can be seen in Actual Vs Potential Market Share table. The units produced were sold in the year which means that the accessibility of the product is even more than its rivals as the market share captured in the year by Digby is above 40%. This means that their is an increased demand for Digby's Product. This can also be seen by segment growth rate in the Elite Statistics (Top Left Corner) which is anticipated to be at 16%.
All these things says that Digby must produce as much as possible, hence quantity would be a greater number.
