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Question

Data for the North, South, East, and West divisions of Free Bird Company are as follows:

Sales
Income from
Operations
Invested
Assets
Rate of Return
on Investment
Profit
Margin
Investment
Turnover
North $750,000 (a) (b) 20% 8% (c)
South (d) $75,600 (e) (f) 12% 1.8
East $840,000 (g) $280,000 18% (h) (i)
West $1,100,000 $99,000 $550,000 (j) (k) (l)

c. Which division is the most profitable in terms of (1) return on investment and (2) residual income?

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In this problem, we are asked which among the divisions under the Free Bird Company is the most profitable.

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