Titus Inc.has Two Divisions - Southeast and Northwest

Essay

Titus Inc.has two divisions - Southeast and Northwest.

(1)Using the segmented income statements presented,determine the profit margin ratio for each division.
(2)Assume the Southeast division had average operating assets totaling $6,000,000 for the year,and the Northwest division had average operating assets totaling $1,800,000.Calculate return on investment (ROI)for each division.
(3)Assume Titus has a cost of capital rate of nine percent.Calculate residual income for each division.