Section 11 - Chap 10&11 - AEM 323 Section Problem...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
AEM 323 Section Problem Set 11 Chapter 10 Problem 1 1. What is meant by a decentralized organization? 2. Distinguish between a cost center, a profit center, and an investment center. 3. What is meant by the terms margin and turnover ? 4. What is the equation for return on investment (ROI)? What is the expanded equation for ROI using the Du Pont method? 5. What are the three basic approaches to improving return on investment (ROI)? 6. What is meant by residual income? 7. What are the advantages of using Economic Value Added instead of ROI as a gauge of success? 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Problem 2 Calculate the margin, turnover, and ROI for each division. Use residual income to evaluate each division’s performance. Trading Investment Banking Private Bank Retail Bank Commercial Bank Revenue $6,000 $8,000 $1,200 $18,000 $11,000 Net Operating Income $1,500 $3,400 $800 $1,200 $400 Average Operating Assets $3,500 $2,000 $800 $12,000 $10,000 Minimum Required Rate of Return 30% 18% 15% 8% 12% Division Which divisions would probably accept an investment opportunity yielding a 20% rate of
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

Section 11 - Chap 10&11 - AEM 323 Section Problem...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online