Chapter_12_Applying_Excel.xls
Chapter 12: Applying Excel
Data
Sales $25,000,000
Net operating income $3,000,000
Average operating assets $10,000,000
Minimum required rate of return 25%
Compute the ROI
Margin ?
Turnover ?
ROI ?
Compute the residual income
Average operating assets ?
Net operating income ?
Minimum required return ?
Residual income ?
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Page 1
Chapter_12_Applying_Excel.xls
Chapter 12: Applying Excel
Data
Sales $25,000,000
Net operating income $3,000,000
Average operating assets $10,000,000
Minimum required rate of return 25%
Compute the ROI
Margin 12%
Turnover 2.5
ROI 30%
Compute the residual income
Average operating assets 10,000,000$
Net operating income 3,000,000$
Minimum required return 2,500,000
Residual income 500,000$
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Page 2
Chapter_12_Applying_Excel.xls
Chapter 12: Applying Excel
Data
Sales 25000000
Net operating income 3000000
Average operating assets 10000000
Minimum required rate of return 0.25
Compute the ROI
Margin =B5/B4
Turnover =B4/B6
ROI =B5/B6
Compute the residual income
Average operating assets =B6
Net operating income =B5
Minimum required return =B7*B18
Residual income =B19-B20
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Page 3
Chapter_12_Applying_Excel.xls
Chapter 12: Applying Excel
Data
Sales $25,000,000
Net operating income $3,000,000
Average operating assets $8,000,000
Minimum required rate of return 25%
Compute the ROI
Margin 12%
Turnover 3.125
ROI 38%
Compute the residual income
Average operating assets 8,000,000$
Net operating income 3,000,000$
Minimum required return 2,000,000
Residual income 1,000,000$
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Page 4
Chapter_12_Applying_Excel.xls
Chapter 12: Applying Excel
Data
Sales $1,200
Net operating income $72
Average operating assets $500
Minimum required rate of return 15%
Compute the ROI
Margin 6%
Turnover 2.4
ROI 14%
Compute the residual income
Average operating assets 500$
Net operating income 72$
Minimum required return 75
Residual income (3)$
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Page 5