Performance Evaluation – HO7

Template:

Ave. Asset - xx

Total (P) %
Operating xx xx
Income
Target Income (xx) (xx)
Residual Income xx xx

ROI = Profit Margin * Asset Turnover

OI/S * S/A

Problem 12, pg. 2

Ave. Asset – 600,000

Total (P) %
Operating 126,000 21%
Income [126,000/600,000]
Target Income 90,000 (15%)
[600,000 *15%]
Residual Income 36,000 6%

PM: 126,000 Sales: 840,000

Sales: 840,000 Assets: 600,000
= 15% = 1.4

Problem 13, pg. 3

Ave. Asset – 5,000 [1,200/24%] Q2

Total (P) %
Operating 1,200 24%
Income
Target Income (1,000) (20%)
[5,000 * 20%]
Residual Income 200 Q4 4%

PM: 1,200 Q1 Sales: 10,000

Sales: 10,000 Assets:
= 12% = 2 [24%/12%] Q3